Bitcoin Dominance Trading refers to the practice of analyzing and trading based on Bitcoin’s market share relative to other cryptocurrencies. It is typically expressed as a percentage that indicates how much of the total market capitalization is attributed to Bitcoin.

Traders monitor Bitcoin’s dominance to gauge the overall sentiment in the market. When Bitcoin’s dominance rises, it often suggests that investors are favoring Bitcoin over alternative cryptocurrencies, which could indicate a more risk-averse market atmosphere.

Conversely, a decline in Bitcoin dominance might suggest traders are shifting interest to altcoins, viewing them as potentially more profitable investments. Investors can use changes in Bitcoin dominance as a signal for making trading decisions.

For example, a rising dominance might prompt traders to allocate more funds into Bitcoin, while a fall could encourage investments in altcoins. Understanding Bitcoin dominance can help in strategizing trades based on market trends and investor sentiment, influencing both short-term and long-term trading approaches.