Bitcoin Dominance Is a Marketing Metric, Not an Indicator of Market Strength

The Bitcoin dominance metric is essentially a ratio between two artificially inflated figures, which are inherently distorted by the methods used to calculate market capitalization. Bitcoin dominance (BTC.D) is defined as the market capitalization of Bitcoin divided by the total market capitalization of all cryptocurrencies. However, market capitalization itself does not equate to actual money moving in the market. Market capitalization is calculated as the market price multiplied by the total supply of tokens. In reality, only a tiny fraction of this supply is involved in active transactions—what we call the liquid part. The price is set within a narrow demand-supply range, and any movement there is multiplied across the entire emission, often leading to billions of dollars in perceived growth with minimal actual capital influx. Both the numerator (Bitcoin’s market cap) and denominator (total crypto market cap) are based on these hypothetical figures. When altcoins are pumped, their market cap grows faster relative to Bitcoin, causing the dominance to fall. Conversely, when Bitcoin is pumped, dominance increases. However, in terms of real money exchange, the transfer can be minor. Bitcoin dominance is therefore not a true indicator of Bitcoin’s strength but a visualization constructed from inflated numbers that have little direct connection to real-world money. Market capitalization is essentially the product of the price on a thin order book and the entire emission—including millions of "dead" coins that are irrelevant to active traders. The apparent liquidity shifts are often the result of strategic maneuvers by market makers rather than organic capital flows. The dominance chart shows more about "public attention" at a given moment rather than actual capital share. Large movements appear significant because tiny price jumps in small volumes can cause overall market cap to spike by billions in just one click. The chaotic nature of crypto markets—leveraging questionable liquidity—allows market operators to shuffles funds among assets, maintaining an illusion of stability or growth in market cap for months. In conclusion, Bitcoin dominance should be viewed as a marketing indicator rather than an economic one. It reflects who is being pumped at the moment rather than where real money is actually invested.