Bitcoin Dominance sitting again near 40%
The Bitcoin Dominance has been working its way back towards the 40% level for the last 5 days. Dominance lost the initial 42% support from two weeks ago and spent a few days getting rejected off that level, clearly turning it into resistance as opposed to the Support that it started with. Here we are again but at a far more important level – the 40% level.
The 40% level held twice before this year and with each we sparked a new rally. From the low in May to the rally in July and from the low in September to the rally in October, the Price of Bitcoin was going up while the Dominance was rising. This is a telltale sign that Alts are getting sold while traders move capital back to Bitcoin.
Now, each bounce in Dominance fails to reach the previous high. This results in what is called a Descending Triangle. This is when price holds the same level of support but continues to produce lower highs. When these things show themselves during downtrends, the results are usually a catastrophic break to the downside. (Think Bitcoin from 600 to 3120 back in 2018.
Is there History to this level?
When Bitcoin put in its 20K ATH in December of 2017, other coins were enjoying the ride as well. In fact, they enjoyed the ride so much that when Bitcoin dropped immediately after, AltCoins had a month long “Season”.
This Season – later known as AltSeason, was a time when anyone who wasn’t a HODLER, sold Bitcoins to jump into the Alt craze. These days were insane. You could literally buy any AltCoin and within a few days your coin would be up 40-400%.
Now, this all came about when Bitcoin Dominance suffered its lowest lows. What this does, as the Dominance drops, is tell you that traders are comfortable selling their Bitcoin and putting it into AltCoins to take trades. Then, when they are done, they can return to Bitcoin and hope that Bitcoin is a cheaper price then when they sold.
The Three Potentials
Consider these three scenarios when dealing with Bitcoin Dominance is headed down…
1 – Dominance Down – Price Up = Alts can look very juicy
2 – Dominance Down – Price Down = Sideways and Choppy Market
3 – Dominance Down – Bitcoin Sideways = Alts can look juicy
Bitcoin is still in a Macro uptrend but has recently broken its trendline that was helping it make new ATHs. The local trend is down. However, if Bitcoin is to give us that push to the 618 or even retest the high, then we could see Alts fly off the shelf for a Christmas rally similar to that of 2017.
Even if we see Bitcoin just consolidate and find a range then we have a good chance to see some Alts pump hard. As always, time will tell.
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