Monitoring Bitcoin dominance (BTC-DOM) is a valuable tool for crypto traders. It provides insights into the relationship between Bitcoin (BTC-USD) and altcoins (ALT-USD), helping you make bette decisions about your altcoins and tokens.
Spotting Altcoin Seasons:
Altcoin seasons are periods of heightened interest in different cryptocurrencies and tokens, often causing their total market cap to surpass that of Bitcoin.
Understanding BTC-DOM's movements can help you anticipate how the market might react:
1. BTC-DOM Goes UP:
- When BTC-DOM rises and BTC-USD also climbs, it often indicates a bullish phase for Bitcoin. During this time, ALT-USD may stay relative stable and face sideways.
- If BTC-USD experiences a decline while BTC-DOM is on the upswing, ALT-USD might witness a significant dump.
- When BTC-USD moves sideways and BTC-DOM follows suit, ALT-USD tends to maintain a stable course.
2. BTC-DOM Goes SIDEWAYS:
- If BTC-DOM remains relatively stable and BTC-USD sees an uptrend, ALT-USD often mirrors this upward movement.
- Conversely, if BTC-USD takes a dip while BTC-DOM remains flat, ALT-USD tends to follow suit with a decline.
- When both BTC-USD and BTC-DOM exhibit sideways patterns, ALT-USD typically remains in a state of relative stability.
3. BTC-DOM Goes DOWN:
- A decrease in BTC-DOM coupled with a rising BTC-USD often leads to a pumps for ALT-USD.
- When BTC-USD experiences a decrease while BTC-DOM falls, ALT-USD may stabilize or enter a sideways phase.
- If BTC-USD moves sideways while BTC-DOM declines, ALT-USD often witnesses an upward movement.
Remember that while these trends offer valuable insights, the crypto market is highly volatile. Low cap altcoins can behave unexpectedly even when Bitcoin dominance suggests a particular trend. Therefore, use Bitcoin dominance as one of many tools in your investment strategy, and always conduct thorough research before making decisions.