What is market dominance?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 4 min
In short
Dominance is one asset's share of the total crypto market capitalisation, most often quoted for Bitcoin. It is a ratio, nothing more: the share can rise while the whole market shrinks, so it has to be read separately from absolute values.
Key points
- One asset's share of total market capitalisation
- The ratio moves when the denominator moves
- Each site counts a different set of coins
- It does not directly measure money moving
Definition
One asset's market capitalisation divided by the total capitalisation of all tracked cryptoassets, expressed as a percentage. Calculated for Bitcoin, it is called Bitcoin dominance.
The maths is trivial: divide one asset's market capitalisation by the total. Since capitalisation is price times circulating supply, dominance responds to both. An asset's price can stand still and its dominance will still move if everything else moves.
The catch is that the denominator differs by data provider. Some track a few hundred assets, others tens of thousands, and including or excluding stablecoins shifts the number again. Two dominance figures from two sites are often not measuring the same thing.
You will often read that falling dominance means money rotating into altcoins. Dominance does not measure flows. New listings and growing circulating supplies inflate the denominator on their own. To look at flows you need different data, such as volume or exchange deposits and withdrawals.
Watch out for
- · Do not read a change in the ratio as money moving
- · Do not compare figures across sites that track different universes
- · Dominance levels give no basis for judging where prices go next