You can view the Bitcoin Dominance graph here:
Tai Zen: In this video, I want to make this video to define what is Bitcoin dominance. What does it mean? Who uses it? Who doesn’t use it? How to use it in your cryptocurrency investing. I will talk about the misconception and the reality of it.
Before I explain the Bitcoin dominance, you need to understand what the market capitalization of a cryptocurrency or marker cap in short.
It means that you take all the cryptocurrency coin available for that specific cryptocurrency and multiply by the current price of it. The total is called the Bitcoin market capitalization. It just simply means the total value of all the coin for that particular cryptocurrency.
If we do that for all 700 and something cryptocurrency out there, we will come up with the number, let’s just say, $50,000,000,000.
If we take the total value of Bitcoin, which is $40,000,000,000, the Bitcoin dominance means that 80% of the entire cryptocurrency market cap is made up of Bitcoin.
If the entire value of Bitcoin is only worth $30,000,000,000, the Bitcoin dominance would be 30% and so on.
Whatever the portion of the value of Bitcoin on the total value of cryptocurrency market cap, that the Bitcoin dominance is. That’s is the mathematical way to calculate it.
You don’t have to calculate it because there are 2 websites doing for you already. One is coinmarketcap.io. That website is owned by the same people that own ShapeShift.io, which is Erik Voorhees and his company.
They are the first ones to create the Bitcoin dominance percentage, which is a more accurate name. However, I and others call it Bitcoin dominance index because it’s a number.
There is another website called coinmarketcap.com who saw that and copied it on their website. That is the version that I use because they create line price charts that goes along with it, so you can do technical analysis on it.
I do a lot of technical analysis on the bitcoin dominance index. There are some people on Twitter said that no one else did the technical analysis on bitcoin dominance. I replied that it didn’t make sense to listen to someone that didn’t make a full-time living off of it. That is one of the tools to help me determine when to move money into Bitcoin or Altcoins.
Regardless if you use it or not before, I highly recommend that you look at it now so that you know how to manage your money in cryptocurrency.
The other thing I want to mention about bitcoin dominance is it is not 100% accurate. The reason is all the numbers of cryptocurrency in there are not real.
For example, let’s say I do an ICO and I issue a 1,000,000,000 coins. One of my friends pays $10 for each of the coins. If we apply the way we calculate the market cap, it will be $1,000,000,000.
Therefore, we have to take it with the grain of salt. It’s not 100% accurate because some of 700 something cryptocurrency on the market is bogus.
As long as coinmarketcap.io measures it consistently, even if it’s not accurate, at least it is the same inaccuracy. That’s how everyone on our team uses it.
Now let’s talk about who uses it, who doesn’t use it and who dislikes it.
The first group of people that use bitcoin dominance the most is usually the cryptocurrency investors like my team. We are the one who uses the most because we draw the trend channel on it.
If it hits the opposite side of the trend channel when bitcoin dominance is down, that’s when we are going to move our money into Bitcoin.
When the bitcoin dominance is all the way at the top and near resistance on the other side of the trend channel, we’re going to move our money back into the Altcoins.
That’s how it is being used by the cryptocurrency traders and investors.
The second group of people that use bitcoin dominance is the cryptocurrency maximalist. In the world of cryptocurrency, the maximalist is a diehard fan or believer.
When we talk about the Bitcoin maximalist, which is coined by Vitalik Buterin, the founder of Ethereum, it means those people only believe that Bitcoin is the only cryptocurrency and no other cryptocurrency is going to surpass Bitcoin.
They do not like bitcoin dominance because every week that goes by, the bitcoin dominance within the cryptocurrency world is slowly diminishing, which shows that it loses power.
The bitcoin dominance index is used a lot by cryptocurrency maximalists. I first heard the term from the economist named Tour Demister. He used on the Bitcoin Meisters show once time. That is me, my buddy LeonFu.com and everybody on our team because we are a diehard believer of cryptocurrency.
We used to believe that there is only one coin taking over everything like Bitcoin maximalist, but time has changed. Therefore, we have changed along with it and adapt to it.
So the first group of people is the traders and investors. The second group is cryptocurrency maximalists who like to use the bitcoin dominance number.
In this video, I just want to define what bitcoin dominance is. It is in the news; everybody has been talking about it and there are people who are not clear of it. That’s why I want to make this video.
In a separate video, I’m going to share the reasons why the bitcoin dominance is declining and I don’t see it going back up to the 70% or 80% range.
Before I conclude this video, as of right now, even bitcoin dominance drops 10%, 20% or 30%, it will still be the dominant cryptocurrency if none of the other cryptocurrency is beyond Bitcoin.
Right now, Ripple is shooting at price and it got like 5% of the dominance. However, I don’t put it in the same category of cryptocurrency because it’s a private blockchain.
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