What is the BTC Dominance Index (DOM) and how does it affect the cryptocurrency market

BTC Dominance (also known as btc.d, DOM) is an important indicator that helps you assess Bitcoin’s strength relative to the entire cryptocurrency market. This is a metric that every investor needs to monitor to grasp market trends, as it clearly reflects changes in investor sentiment and capital flows in the market.

What is BTC Dominance: Basic Concept and Calculation Method

BTC Dominance is defined as the percentage of Bitcoin’s market capitalization compared to the total market capitalization of the global crypto market. In other words, it shows Bitcoin’s dominance over other altcoins.

The calculation formula for BTC Dominance is very simple: divide Bitcoin’s market cap by the total market cap of all cryptocurrencies, then multiply by 100 to get a percentage. For example, if Bitcoin’s market cap is $9 billion and all other altcoins combined are $1 billion, then BTC Dominance = 9 / (9 + 1) × 100 = 90%.

Currently, according to data updated in January 2026, the BTC Dominance index is at 56.41%, indicating that Bitcoin still holds a dominant position but is no longer as overwhelming as in previous years. This ratio can fluctuate from 30% to over 70% depending on market conditions.

Bitcoin is considered the “base currency” of the entire crypto ecosystem. Most investors must buy Bitcoin or USDT before participating in ICOs or investing in other altcoins. When the market shows signs of weakness, investors often exit altcoins by selling into Bitcoin to protect their capital.

4 Main Market Scenarios Related to BTC Dominance

In the crypto market, there are 4 main scenarios that often occur related to fluctuations in BTC Dominance:

Scenario 1: Bitcoin rises, the entire market follows

This is the most ideal situation that all investors hope for. When Bitcoin starts to surge, market confidence is restored, and large institutions as well as retail investors pour money into Bitcoin and other promising altcoins. This capital flow creates a broad bullish cycle across the entire market.

Scenario 2: Bitcoin rises but altcoins fall

This is a situation where capital flows from altcoins or outside the market shift and only flow into Bitcoin. At this point, BTC Dominance will increase significantly because investors are taking profits from altcoins to buy Bitcoin, or new entrants only trust Bitcoin as the safest asset.

Scenario 3: Bitcoin falls, the market declines

This is a common scenario and can be considered the market’s default. When Bitcoin—the king of cryptocurrencies—weakens, the entire system will shake. Altcoins not only decline but often fall much more sharply than Bitcoin due to their higher risk.

Scenario 4: Bitcoin moves sideways, altcoins grow

At this stage, BTC Dominance decreases because Bitcoin is losing momentum while strong capital flows into well-rated altcoin projects. This period is often called the “altcoin season” and can last from a few months to 1-2 years depending on the market cycle.

What Should Investors Do When BTC Dominance Rises or Falls?

Understanding strategic responses when DOM changes is key to optimizing your investment portfolio.

When BTC Dominance increases:

• If Bitcoin’s price rises along with DOM, market confidence is increasing. At this point, investors should hold steady or even increase their BTC positions, as large institutional capital may continue to flow in.

• If Bitcoin’s price drops while DOM increases, altcoins will decline even more. To avoid heavy losses, consider moving into USDT or other stablecoins to protect your capital.

• However, if you look closely at altcoins, some projects with real products still grow strongly even when DOM is high. These projects demonstrate their potential and may break out beyond Bitcoin, though such situations are very rare.

When BTC Dominance decreases:

• If Bitcoin’s price rises while DOM decreases, this is a positive signal for altcoins—most of them will outperform Bitcoin. This is an opportunity to build positions in quality altcoins with high potential.

• If Bitcoin’s price drops while DOM decreases, you need to carefully observe capital flows. Initially, altcoins may fall sharply along with Bitcoin, but then they will rebound quickly and return to higher levels than before.

When BTC Dominance is high, capital from altcoins is gradually withdrawn and redirected into Bitcoin. At this point, most altcoins find it difficult to increase significantly. The best strategy is to focus on buying and holding good-quality altcoins long-term, with real products, solid technology, and most importantly, avoid buying at excessively high prices.

Key Historical Milestones of BTC Dominance: From 2016 to Present

To better understand the strength of this index, look back at important historical milestones:

2016: Bitcoin was below $100, and Ethereum had just been launched. At that time, BTC Dominance was very high, accounting for over 90% of the market cap.

2017 - ICO Boom Period: This year marked a turning point as the ICO wave exploded from mid-year. BTC Dominance dropped to 35%—the lowest at that time—as billions of USD shifted from Bitcoin to new tokens. During this period, Ethereum accounted for up to 30% of the market cap due to skyrocketing ETH demand for ICO participation.

End of 2017: BTC Dominance rebounded strongly above 65% as Bitcoin surged to nearly $20,000. Selling pressure from altcoins caused Bitcoin to break out.

Mid-2018: BTC Dominance plummeted to 33%—the lowest at that time—as large whales took profits and shifted to altcoins. This was followed by a severe sell-off dragging both Bitcoin and altcoins downward.

April-July 2018: BTC Dominance began to recover to nearly 45% thanks to positive news from the SEC and a price rally from $6,000 to $9,800.

End of 2018: The market experienced a prolonged downturn, gradually dampening retail investor confidence. However, BTC Dominance remained around 50%.

2020-2021: After a sharp crash in March 2020 (Bitcoin dropping to $3,800), the market recovered spectacularly. BTC rose to $41,000 by late 2020 and early 2021, pushing BTC Dominance up to nearly 74%—a record high during this period.

Currently (2026): BTC Dominance stands at 56.41%, reflecting a relatively balanced market between Bitcoin and other altcoins.

Besides BTC Dominance: Other Indicators You Need to Watch

To analyze the market comprehensively, you should not rely solely on BTC Dominance but also consider other indicators such as TOTAL (total market capitalization of all crypto), TOTAL2 (market cap of all altcoins), DEFI index, or USDT.D. These metrics provide deeper insights into capital flows within the market.

To succeed in the crypto market, you need practical experience and the ability to sense capital movements delicately. That’s why many newcomers face losses in this field. By understanding BTC Dominance and related indicators, you will have more effective tools to make smart and timely investment decisions.