Bitcoin Dominance Is a Market Illusion, Not an Economic Metric

The Bitcoin dominance metric is merely a ratio between two artificially inflated figures, which are themselves distorted by the method of capitalization calculation. Bitcoin dominance (BTC.D) is calculated as the market capitalization of Bitcoin divided by the total market capitalization of all cryptocurrencies. Market capitalization does not equate to real money in the market; it is derived by multiplying the market price by the total supply of tokens. Actual transactions occur only within a tiny fraction of the total circulating supply—namely, the liquid part. Prices are set within narrow demand and supply windows, and any movement here can be multiplied across the entire issuance, creating the illusion of billions in growth from relatively small inflows. Both the numerator and denominator of this ratio are based on speculative measures. When altcoins are pumped, their market capitalization grows faster than Bitcoin's, causing the dominance to drop; conversely, pumping Bitcoin increases its dominance. However, these shifts often involve very small actual monetary transfers. The so-called "market cap" is a product of narrow-price brackets, encompassing millions of "dead" coins that no one is actively trading, and liquidity shifts are skillful moves by market makers rather than organic capital flow. On the graph, Bitcoin dominance does not reflect "capital share" but rather the crowd’s focus at a specific moment. Large movements appear spectacular because they result from tiny volume jumps that suddenly inflate "market cap" figures by billions. In crypto, chaos exists with regard to actual liquidity, which manipulative actors exploit by shifting funds between assets on schedule, maintaining an illusion of stable or increasing capitalization over months. To conclude, Bitcoin dominance is primarily a marketing indicator, not an economic one. It indicates which asset is currently being pumped but does not reveal where the real money is actually invested.