Bitcoin Dominance and Altcoin Season 2.0
In this episode of NewsBTC’s daily technical analysis videos, we’ll look at Bitcoin dominance and possible signs of a surprise altcoin season developing under the bearish macro backdrop.
Check out the video below:
VIDEO: Bitcoin Dominance Analysis (BTC.D): September 7, 2022
For today’s video, we’re going to look at Bitcoin dominance on monthly and weekly time frames. There is potentially a remarkable collapse underway that – based on its significance – could be telling of something bigger: a possible altcoin season that no one expects.
Bitcoin Dominance to Send to Altcoins
Generally, altcoins only perform well during a bull market. So BTC.D breaking down is very unusual considering the current macro backdrop.
Nevertheless, BTC dominance is breaking down from a diagonal trend line on price and the Relative Strength Index. LMACD also clearly shows a battle between bulls and bears. Or more accurately, Bitcoin versus altcoins, with altcoins currently taking the lead.
Is an altcoin season about to appear? | Source: CRYPTOCAP-BTC.D on TradingView.com
The signal from the last alt season is back
Moving to weekly timeframes on Bitcoin dominance, the trend lines become a little clearer. Price breaks down from both diagonal and horizontal support of great importance. Comparing the last cycle, we can see a similar setup where dominance can make a lower low, while the RSI forms a higher low and bullish divergence.
On the weekly Ichimoku, Bitcoin dominance has been rejected by the cloud. Last time the price fell from the cloud, it took BTC dominance from 70% to where we are currently at around 39% market share.
Will we get a repeat of the last altcoin season? | Source: CRYPTOCAP-BTC.D on TradingView.com
Related Reading: WATCH: Weekend At Bitcoin’s: Will The Dead Crypto Make a Comeback? BTCUSD September 2, 2022
Could this be a possible target for crypto market share?
So where might our target be in terms of new lows set in Bitcoin dominance? One potential area is another retest of resistance against neck-turned support from the last bottom formation – an inverted head and shoulders. The goal will take BTC.D to around 32% dominance.
Could 32% dominance be the potential target? | Source: CRYPTOCAP-BTC.D on TradingView.com
How Ethereum and the Merger May Affect BTC.D
To further illustrate why this setup can come about, we’ve turned BTC.D upside down and compared it to ETHBTC. The primary factor driving a historic altcoin season is the Ethereum Merge.
In the chart below, we can see that Ethereum is very much responsible for much of the current Bitcoin dominance chart formation. This makes sense considering that Ethereum is the second largest cryptocurrency by market capitalization and has the biggest impact on this metric outside of Bitcoin itself.
Bitcoin dominance is driven heavily by the ETHBTC pair | Source: CRYPTOCAP-BTC.D on TradingView.com
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Featured image from iStockPhoto, Charts from TradingView.com