BTCD regains resistance as ETH falls after merger

by James · October 4, 2022

Bitcoin Dominance (BTCD) returned a long-term support area in September. It has been rising since then and is about to break through another resistance level. Will Bitcoin dominate altcoins in the coming weeks?

Many analysts expected a big altcoin season in anticipation of the Merge update on Ethereum (ETH). In fact, Bitcoin dominance then fell to a support area, and ETH has rallied 74% against BTC since the summer dip.

However, BTCD held support, bounced, and today continues to rise, weakening altcoins relative to BTC.

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Bitcoin dominance trades in a range

Bitcoin dominance has been moving in a range of 39.50%-48% since May 2021. On the weekly chart, we can see that the 39.50% level has already been confirmed as support four times (blue circles).

Each bounce from this area has been weaker, so a descending triangle pattern has appeared on the chart.

The BTCD price has been rejected three times from the resistance level set by the descending line in this triangle (red circles).

The exception was the several-week period of May-June 2022, when a slowdown in the cryptocurrency market caused Bitcoin to strengthen against altcoins, which suffered more severely.

However, the move turned out to be a fakeout and Bitcoin Dominance resumed trading in a descending triangle structure.

Currently, Bitcoin dominance is struggling to break out above the minor resistance area at 41.50%. If successful, the first resistance area is the 42.50%-43% area.

It coincides with the descending resistance line and the 0.382 Fib retracement level.

Weekly technical indicators are moderately bullish. The RSI is in neutral territory near 50 and rising. The MACD is close to making a bullish cross on a signal line and generating a green momentum line.

BTCD ongoing breakout

On the daily chart, we see Bitcoin dominance trying to close the daily candle above resistance at 41.50%. If successful, we should expect a rise to the second resistance area of 44.50%.

In the past, this level has repeatedly acted as resistance and support. Moreover, it is located in the golden pocket area between 0.5 and 0.618 Fib retracements, which is the most common correction target.

Daily technical indicators support the possibility of a continuation of the upward movement. The RSI is rising and close to entering bullish territory. MACD generates multiple green bars with bullish momentum.

And the Bollinger Band Width Percentile (BBWP), which measures the volatility of an asset, provides an upward signal of expansion. This further reinforces the strength of the upward movement of BTCD and the possibility of further strengthening of Bitcoin against altcoins.

Cryptocurrency trader @icryptomonk tweeted a chart of BTCD, suggesting that Bitcoin dominance is currently breaking through the resistance level we mentioned above. Thus, he “expects ALT/BTC to continue bleeding for the next couple of days.”

Ethereum (ETH) Loses to Bitcoin (BTC)

The ETH/BTC pair had been in an uptrend since the June 13 bottom of 0.049 BTC. Since then, Ethereum has gained 74% against Bitcoin in anticipation of the Merge update, which completed the network’s transition from proof-of-work to proof-of-stake protocol.

However, just before September 15th and the update took effect (blue arrow), ETH/BTC started to lose value sharply. So far, the decline has led to support at 0.067 BTC at a 0.5 Fib retracement. This equates to a 21% decline from the peak at 0.085 BTC.

The start of Ethereum declines against Bitcoin coincided with the bottom of Bitcoin dominance just below the 39% level. If BTCD overcomes the resistance outlined in the previous section, further declines in the ETH/BTC pair should be expected at least to the next support area at 0.063 BTC.

On the other hand, in case of a short-term bounce, a move to the 0.072 BTC area is likely, validating resistance before further decline.

For Be[in]Crypto’s Past Bitcoin (BTC) Analysis, click here.

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