I keep hearing traders talk about "Bitcoin Dominance" as a key metric to watch, especially when predicting if it's going to be an "altcoin season." I get that it has something to do with Bitcoin's market share, but how is it actually calculated? More importantly, how do you interpret the chart? Does a high dominance mean alts are a bad buy, or does a falling dominance always signal an altcoin rally? I'm looking for a practical explanation.
That's a great question, and it's a more nuanced metric than people often think. Bitcoin Dominance is basically Bitcoin's market capitalization expressed as a percentage of the total crypto market cap. A high percentage means Bitcoin is sucking up most of the market's value. While a falling dominance often coincides with money flowing into altcoins, it's not a perfect signal—it could also mean Bitcoin is crashing harder than alts! For a really clear breakdown of how to use it, I'd recommend this glossary entry on bitcoin dominance. It explains the calculation, the historical context, and, most importantly, the limitations of the metric so you don't misinterpret it.