Bitcoin Dominance Index
Bitcoin Dominance Index, or BDI, is a metric that measures the percentage of the total cryptocurrency market capitalization represented by bitcoin.
The Bitcoin Dominance Index is a ratio of the bitcoin market cap compared to the whole cryptocurrency market cap. It is commonly used to track the relative strength of Bitcoin compared to other cryptocurrencies and to provide direct evidence of the overall sentiment of the crypto market.
This metric, expressed in percentage, is calculated by taking the market capitalization of bitcoin and dividing it by the total market capitalization of all cryptocurrencies. The formula is BTC Dominance(%) = (BTC Market Cap / ALL-CRYPTO Market Cap).
A high Bitcoin Dominance indicates that bitcoin is a dominant player in the crypto market. In contrast, a low Bitcoin Dominance suggests that other cryptocurrencies are gaining in strength compared to bitcoin.
It’s important to note that the BDI can also be used as an indicator of market volatility. A high BDI means that the market is not as volatile as a low BDI because it indicates that most of the market is concentrated in a single cryptocurrency: bitcoin. The BDI can be affected by market sentiment, regulatory changes, and other external factors.