Deciphering Bitcoin Dominance: Market Strategies and Forecast Guide for 2025

From 2024 to 2025, the cryptocurrency industry experienced unprecedented complexity and diversification. Starting with the approval of Bitcoin ETFs, rapid expansion of AI-related tokens, deepening of DeFi 2.0, and the emergence of new meme coin projects one after another. Amid these diverse market conditions, an important indicator that influences investment decisions is Bitcoin dominance.

We will delve into how this indicator functions and how to leverage it in investment strategies.

Understanding the Essence of Bitcoin Dominance

Bitcoin Dominance (commonly BTC.D) quantifies the market share of Bitcoin in the total cryptocurrency market capitalization. As of January 2026, its market share has reached 55.95%.

The calculation method is simple:

Dominance Value = Bitcoin Market Cap ÷ Total Cryptocurrency Market Cap × 100

However, behind this simple formula lie all market-moving factors such as investor psychology, regulatory environment changes, technological trends, and strategies of large institutional investors.

Market Cycles Seen from Past Dominance Trends

Tracking the historical fluctuation patterns of Bitcoin dominance reveals the market’s true nature.

During the ICO bubble of 2017, capital flooding into emerging projects caused Bitcoin dominance to drop to a low of 32%. Later, after the COVID-19 shock in 2020, there were phases where it exceeded 70%, clearly reflecting investors’ risk-avoidance stance.

These fluctuations are not mere statistics but visualize how trillions of yen in funds move between Bitcoin and altcoins.

Why Track Bitcoin Dominance?

Analyzing Bitcoin dominance serves as a compass to determine the current stage of the market cycle.

Broadly, the market oscillates between two phases. One is the “Bitcoin Phase”, where investors increase risk aversion and concentrate funds into the more secure Bitcoin. The other is the “Altcoin Phase”, where a bullish mood seeking higher returns spreads, and funds diversify into various altcoins.

The market in 2025 was characterized by large capital inflows into AI sector-related projects. This further amplified Bitcoin dominance fluctuations, leading to more sensitive market reactions than before.

How to Read and Use Dominance Charts

Several reputable platforms can be used to check real-time Bitcoin dominance:

• TradingView — Track with ticker code “BTC.D”
• CoinMarketCap — In the “Global Charts” section
• CoinGecko — On the “Market Cap Dominance” page

Basic chart analysis patterns

An upward trend indicates capital concentration in Bitcoin, while a downward trend suggests active diversification into altcoins.

Most importantly, sideways movement signals market indecision and loss of direction, often preceding major trend reversals, as confirmed by many cases.

By analyzing Bitcoin price movements, changes in the market cap of various altcoins, and overall trading volume, you can more accurately grasp the current market cycle.

Impact of Rising Bitcoin Dominance on Altcoins

In phases where dominance rises, the altcoin market faces strong headwinds.

Both against the dollar and Bitcoin, downward pressure is common, especially for smaller tokens, which face more severe selling pressure. This phenomenon reflects a “flight to quality” in financial markets, where investors shift funds from uncertain assets to the most trusted Bitcoin.

Reduced liquidity spreads across the market, and price disparities among altcoins tend to widen.

Market Excitement in Altcoins During Declining Dominance

When Bitcoin dominance begins to decline, many altcoins present opportunities for remarkable short- to mid-term returns.

As investors’ risk appetite increases, attention shifts to innovative projects and emerging technological trends, energizing the entire market. This phase is called “Alt Season”, and in the past, small and medium tokens have recorded 2x to 10x, and sometimes over 50x, rapid gains.

However, such surges often lack sustainability, and timely profit-taking is key to successful investing.

Practical Trading Strategies Using Dominance

Avoid relying on a single indicator

Relying solely on Bitcoin dominance increases the risk of failure. Combining it with Bitcoin price, trading volume, and overall altcoin trends clarifies the market’s true direction.

To improve success rates, it is essential to analyze multiple technical indicators such as RSI, volatility, and volume.

Trend-following approach

If a sustained increase in Bitcoin dominance is confirmed, consider gradually reducing altcoin positions. This indicates the market is shifting into risk-off mode, increasing the relative risk of altcoin declines.

Conversely, if a clear downward trend in dominance is established, it suggests expanding investment opportunities in carefully selected altcoins.

Divergence analysis for market insight

When Bitcoin price is falling while dominance rises, it indicates strong selling pressure on altcoins, requiring cautious position management.

On the other hand, simultaneous Bitcoin price increases and declining dominance often signal market expansion and capital inflow into altcoins, a bullish sign.

Frequently Asked Questions About Bitcoin Dominance

Where is the starting level for altcoin season?

A full-scale rise in the altcoin market generally begins when Bitcoin dominance falls below 45%.

Is a decline below 30% theoretically possible?

While not observed in past records, significant development of the altcoin ecosystem could make this scenario plausible.

Can dominance be used for buy/sell decisions?

Yes. Especially when combined with Bitcoin price, volume indicators, and trend lines, it can serve as a highly reliable buy/sell signal.

Future Outlook on Bitcoin Dominance as a Market Indicator

Bitcoin dominance is an essential indicator for grasping the overall trend of the cryptocurrency market.

In actual investment management, the absolute value of dominance is less important than its directional change and speed. Rapid shifts often indicate market turning points, while gradual changes suggest continuation of long-term trends.

A key lesson from historical data is that around 50% repeatedly functions as an important resistance and support level.

By applying this knowledge to practical investment decisions, you can achieve more accurate market analysis and strategic position management.