Bitcoin is the world's largest cryptocurrency in terms of market capitalization (market cap) and controls a sizable share of the trading activity (and attention) on the cryptocurrency exchanges. We can arrive at a total market cap value for the cryptocurrency space by looking at the summative market capitalizations of all current cryptocurrencies. As a result, Bitcoin dominance is defined as the ratio of Bitcoin's market cap to the rest of the cryptocurrency markets.
While Bitcoin was by far the largest cryptocurrency -and one of the few in existence- for many years, its dominance was considerably closer to 100 percent than it is now. However, when additional cryptocurrencies were launched, Bitcoin's supremacy waned considerably. This is most likely due to the growing popularity of ICOs following the launch of Ethereum and the ERC-20 token standard.
Interestingly, Bitcoin's dominance is frequently influenced by so-called "alt seasons," in which altcoins gain market share compared to Bitcoin, lowering Bitcoin's dominance. However, because Bitcoin dominance is a ratio rather than an absolute word, it is not necessarily immediately influenced by bull or bear markets. This indicates that if Bitcoin's price decreases but the rest of the cryptocurrency market declines at the same rate, Bitcoin's dominance is likely to remain the same.
Although Bitcoin domination is an intriguing statistic to consider, it should be noted that it does not indicate its true worth (especially because of forked and premined coins, which impact the total market cap in a very unnatural way). It is also worth mentioning that market capitalization does not imply an infusion of funds. It is just an assessment based on the current market price and circulating supply.
When Bitcoin was the sole cryptocurrency tradeable on exchanges, it held a near-complete monopoly. With more cryptocurrencies entering the market, its dominance is clearly less than 100 percent, but this is not always a good or bad thing.It is only a tool that may provide us with a better understanding of how the crypto world is progressing.