Dominance Metric

Definition ∞ A Dominance Metric quantifies the market capitalization of a specific cryptocurrency as a percentage of the total cryptocurrency market capitalization. This indicator measures the relative strength and influence of one digital asset compared to the entire market. Bitcoin dominance is the most commonly cited metric, reflecting its position as the leading cryptocurrency. Changes in this metric signal shifts in investor sentiment and capital allocation across the digital asset space.
Context ∞ Discussions surrounding Dominance Metrics are central to analyzing market cycles and investor preferences. A declining Bitcoin dominance, for example, often signals an “altcoin season” where other digital assets gain value more rapidly. Conversely, increasing Bitcoin dominance may suggest a flight to perceived safety during market downturns. Understanding these metrics provides crucial insight into broader market sentiment and asset allocation strategies.