What is the dominance percentage of Bitcoin? What does it indicate for the market?

Bitcoin Dominance (BTC.D) — a key indicator measuring the proportion of Bitcoin's market capitalization to the total market capitalization of Crypto Assets — fell to 59% on August 19, marking a six-month low. This figure represents a significant decline from 65% in May, breaking the long-held trend of Bitcoin maintaining a dominance of over 60%.

The direction of capital flow has changed. When the dominance rate declines, capital is shifting from Bitcoin to altcoins like Ethereum and Solana. Historical data shows that this often indicates the crypto market is entering a new cycle.

Bitcoin Dominance, a Barometer of Market Sentiment

Bitcoin Dominance (BTC Dominance) is a key indicator measuring the relative position of Bitcoin in the entire Crypto Assets market, calculated by dividing Bitcoin's market capitalization by the total market capitalization of the entire Crypto Assets market, then multiplying by 100 to get the percentage.

The significance of this indicator lies in its ability to reflect the real-time flow of funds. When BTC.D rises, it indicates that funds are flowing into Bitcoin, which usually occurs during market volatility or periods of economic uncertainty, as investors turn to Bitcoin for relative safety. Conversely, when BTC.D falls, it means that funds are flowing into Ethereum and other altcoins, indicating an increase in investors' risk appetite.

The current dominant rate level of 59% is significant - this is the largest decline since December 2024 (53.9%), and it is also the first monthly bearish crossover signal seen in four years. The market structure is undergoing a deep evolution.

##Capital Migration, the Critical Point of the Altcoin Season

The path of capital transfer is now clear. As Bitcoin's dominance falls below 60%, Ethereum has become the biggest beneficiary of this round of capital migration.

Data shows that the price of ETH increased by 54% in a single month, significantly outperforming Bitcoin's rise of 10% during the same period. In mid-August, ETH briefly approached the historical high of 4,790 USD, just a step away from breaking the record.

The deepening participation of institutions is the core driving force:

• ETF issuers led by BlackRock and Fidelity saw an inflow of $503 million in a single day (August 7).
• BitMine and other industry giants announced a $24.5 billion ETH accumulation plan

This capital transfer has begun to spread to a wider range of altcoins:

• Chainlink (LINK) weekly increase of 23.1%
• The total market capitalization of the Ethereum ecosystem increased by 3.25% in the last 24 hours, reaching 734 billion USD
• Layer 1 projects such as Solana and XRP are simultaneously attracting incremental capital inflows.

The Coinbase institutional research team clearly stated in a report released on August 15: "The current market environment indicates that as September approaches, we may be nearing a turning point for a full altcoin season."

Technical Aspects and Macroeconomic Environment: Dual Drivers of Market Evolution

Bitcoin's short-term technical structure shows a weak trend:

• The price has fallen below the EMA50 moving average support.
• The RSI indicator shows a bearish divergence after indicating overbought.
• The key support level has moved down to $114,500, while the resistance level remains at $118,500.

The macro environment provides favorable support. The probability of a rate cut by the Federal Reserve in September reaches 92%, and the July CPI year-on-year at 2.7% alleviates inflation concerns. Two members of the Federal Open Market Committee (FOMC) have already voted in favor of a rate cut.

A low interest rate environment could release about $350 billion of retail funds from money market funds, further boosting risk appetite in the crypto market. As the cost of funds decreases, investors are more inclined to chase high Beta assets beyond Bitcoin, fueling the altcoin market.

Historical Patterns, Dominance Rate Thresholds and Altcoin Seasons

Historical data shows that the key threshold of Bitcoin's dominance has predictive power over market trends:

• When the dominance rate exceeds 55% - 60% → Altcoins usually face significant pressure
• When the dominance is below 45% → altcoins often gain upward momentum
• The 50% zone is a key turning point, often triggering significant shifts in market sentiment.

The objective indicator for measuring the Altcoin season—the Altcoin Season Index—is currently at 44, which is below the critical value of 75, but has surged nearly 147% from 25 in July. The calculation standard for this index is that at least 75% of the top 50 altcoins by market capitalization have outperformed Bitcoin over the past 90 days.

Historical similarities are worth noting. The current bearish crossover signal of Bitcoin's dominance is highly similar to the pattern in January 2021, while similar signals previously triggered a sustained upward movement of altcoins for four months.

Interpretation and Application: How to Effectively Utilize the Dominance Indicator

When investors apply the Bitcoin dominance indicator, they need to grasp three key principles:

• Analyze from multiple dimensions. The dominance rate needs to be interpreted in conjunction with price trends, trading volume, and the macroeconomic environment. For example, the current expectation of the Federal Reserve lowering interest rates resonates with the decline in the dominance rate, strengthening the bullish signal for altcoins.
• Pay attention to key threshold changes. The dominance is currently approaching the critical watershed of 55%. If it falls further below this level, it may accelerate the migration of funds to altcoins. Historical data shows that when the dominance falls from a high level and breaks the 50% balance point, it often triggers a large-scale market for altcoins.
• Avoid excessive reliance on a single indicator. Factors such as the expansion of stablecoin scale, the listing of new tokens, or fluctuations in the market capitalization of altcoins may distort the dominance index. It is recommended to compare data across platforms, such as combining Gate market data with CoinMarketCap's market capitalization analysis, to obtain a more comprehensive assessment of market sentiment.

Institutional investors have begun to take action. By monitoring real-time data updates from platforms like Gate, professional traders are adjusting the BTC/ALT position ratio based on changes in dominance, rotating capital between Bitcoin and altcoins to capture excess returns in different market phases.

##Future Outlook

The balance of the crypto market is shifting. With Bitcoin's dominance dropping to 59%, the flow of funds towards altcoins has become a trend. Coinbase's institutional research team predicts that if the Federal Reserve cuts interest rates in September, a "full altcoin season" could drive Ethereum to break its historical peak of $4,790 and lead mainstream altcoins like SOL and XRP to replicate ETH's recent excess returns.

The 55% watershed will become a critical turning point. When this threshold is breached, the speed of capital rotation will accelerate, and the crypto market will transition from being dominated solely by Bitcoin to a new stage of diversified development. History does not simply repeat itself, but it always has similar rhymes.