Explain the Concept of “Bitcoin Beta” for Altcoins and How Dominance Trends Affect It.
"Bitcoin beta" measures the volatility of an altcoin relative to Bitcoin. An altcoin with a beta of 1.5 is expected to move 1.5% for every 1% move in Bitcoin's price, in the same direction.
Dominance trends significantly affect this relationship. During periods of rising Bitcoin Dominance (a risk-off environment), altcoin betas tend to increase on the downside, meaning they fall much harder than Bitcoin.
During periods of falling dominance (altcoin season), altcoin betas can become very high on the upside, as they rally much faster than Bitcoin, but may also decouple, showing less correlation to Bitcoin's minor movements.