Predictive Strength
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Predictive Strength
Measures the market capitalization of Bitcoin as a percentage of all the total crypto market capitalization.
BTC Dominance acts as a real-time gauge of risk appetite. When it rises above key thresholds (e.g., 60% in 2025), it reflects institutional and retail investors treating Bitcoin as a "digital gold" safe haven during market uncertainty, at least relative to other crypto assets. Conversely, sustained elevated levels historically precede altcoin rallies as capital seeks higher beta plays. This self-reinforcing dynamic creates predictable liquidity waves.
Bitcoin Dominance data is sourced by aggregating real-time price and circulating supply data from cryptocurrency exchanges, calculating the ratio of Bitcoin's market capitalization to the total crypto market cap, and normalizing the result against historical averages to create a relative index.
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To understand a predictive factors predictive power, we create a simple long/short strategy and simulate its past performance (with daily rebalancing):
The strategy is rebalanced daily, on a continuous basis. There are 0.5% transaction costs applied on each position adjustment.
Get started by validating the historical performance of the strategy with our transparent code snippets.
Copy and paste the code snippets below into your Python environment or download the files below.