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Posted September 10, 2025 at 9:34 am
1/ Crypto Lesson 2 – Dominance
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Crypto Lesson 2 – Dominance
A very important aspect in cryptocurrencies is dominance, and in this case the most relevant is Bitcoin dominance.
Dominance refers to the weight a coin has in the market and is calculated by dividing the market cap of the coin by the total crypto market cap.
There is a close relationship between the price and dominance of Bitcoin versus the price of altcoins, which we will see in the following table. By definition, altcoins (alternative coins) are all cryptocurrencies other than Bitcoin. Some people also exclude Ethereum, but strictly speaking, Ethereum is also an altcoin.
An example of this relationship could be seen this year between late June and mid-July. In the following chart, we can see how Bitcoin’s dominance fell from 65% to 60%, while the price of Bitcoin rose by 27%. In contrast, the price of Ethereum increased much more than Bitcoin’s, rising by 88% in this case. This usually happens in a bull market, when investors see greater upside potential in other coins than in Bitcoin. As a result, Bitcoin’s dominance falls while its price rises, which in turn makes the price of altcoins, in this case Ethereum, rise much more. Investors are seeking higher returns by taking on greater risk.
Bitcoin dominance tends to rise during bear markets and fall during bull markets. This is because, in a bear market, investors seek refuge in the most stable cryptocurrency, which is Bitcoin. In contrast, during a bull market, investors look for higher returns and are therefore willing to take on more risk, which leads them to invest in other cryptocurrencies besides Bitcoin. This relationship can be seen in the following chart of Bitcoin dominance:
In this article, in terms of metrics, we are going to talk about the Fear and Greed Index. It measures Bitcoin’s sentiment in the crypto market.
The components of this metric are:
There are four levels:
The best strategy is always to go against the market; that is, if everyone is bearish, you should buy, and if everyone is buying, you should sell. Therefore, a good strategy would be to buy in times of extreme fear and sell in times of extreme greed.
In the following chart, we can see that when the indicator is in extreme greed (dark green), the price of Bitcoin, shown in gray, falls (red arrow), and when the indicator is in extreme fear (red), the price of Bitcoin rises (green arrow):
All of this and much more can be found in my book Investing in Crypto with Confidence: How to Analyze, Select, and Manage Digital Assets (Palgrave Macmillan), which will be released in early 2026.
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Originally posted 09th September 2025
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