- Bitcoin Dominance is now at the lowest level since July 2018.
- The dominance fell beneath a multi-year trend line a few weeks ago, making the largest altcoin booms in recent history.
- A surging EHT, BNB, and DOGE have primarily helped the Bitcoin Dominance to fall.
The Bitcoin Dominance is now beneath the 50% level as it sits around 46.38%. Bitcoin Dominance is a measure of how much of the total industry market cap is taken up by Bitcoin. In recent years, Bitcoin Dominance has sustained itself well above the 50% level as most of the capital inside the industry remained in the primary cryptocurrency.
However, in recent weeks, it seems that Bitcoin Dominance has been falling quite remarkably as capital starts to flow out of Bitcoin and into the altcoin sector. It appears that traders are starting to get pretty bored with Bitcoin as the bull run starts to stall over the past month or two.
Bitcoin had managed to break $60,000 in April but only managed to remain above the resistance for around 5-days before it plummeted back beneath and started to head lower. Since then, Bitcoin dropped into the 100-days EMA level, a support that has not been seen since October 2020, before the bull run started.
It is now pretty much in a strange range between $47,500 and $60,000, and the sideways action is causing traders to exit Bitcoin positions and to enter into the altcoin market for increased gains:
The weekly chart provides a better perspective of the recent drop in Bitcoin Dominance:
Looking at the chart above, we can see that Bitcoin Dominance has been somewhat of an ascending triangle pattern for the past three years, with the roof of the triangle at around 71.40%. We can see that Bitcoin Dominance attempted to break 71.40% on around three occasions – December 2017, May/September 2019, and most recently in December 2020. On all three of these occasions, the Bitcoin Dominance could not overcome the mentioned resistance and caused it to roll over.
Each of the downward swings you see on the chart above represents an altcoin rally (season). The longer the downward swing, the bigger the altcoin season. The recent downward swing has been quite substantial, as we can see it caused Bitcoin Dominance to break toward the downside of the long-term rising trend line. This is a significant level to break and is considered to be a long-term trend changing as the technical pattern collapses.
As a result, capital has flowed out of Bitcoin aggressively and started to move inside the altcoin industry. This is why we have seen Ethereum rising quite substantially over the past three months – allowing it to increase by over 110%.
However, Ethereum isn’t even the largest driving force behind the Bitcoin Dominance capitulation. For example, over the same period, Binance Coin managed to surge by 1,100%, Dogecoin exploded by 1,735%, and even XRP saw a 266% increase.
All of these significant price hikes combined are what is causing Bitcoin Dominance to fade so aggressively.
Let us take a look at the Bitcoin Dominance chart in the near term and take a look at some of the areas of support and resistance moving forward.
Bitcoin Dominance Analysis
What has been going on?
Looking at the Bitcoin Dominance chart above, we can see that the reversal of the previous uptrend began right at the start of the year. BTC Dominance had hit resistance at 72.55 (1.618 Fib Extension), and it started to roll over from there. By the end of January, BTC Dominance had already dropped beneath the 100-day EMA and fallen as low as 61%.
Through February and March, BTC Dominance did manage to find some form of stabilization around the 60% level. However, it was unable to continue much further above 63.41% during that period.
The support eventually collapsed in April as Bitcoin Dominance continued to decline. It fell beneath 60% throughout the month and continued to slide until eventually breaking beneath 50% at the end of the month.
In May, BTC Dominance fell further to meet the support at 46.34% (downside 1.272 Fib Extension) yesterday. It is attempting to hold this support, but it is highly unlikely to hold with the significant bullish momentum in the altcoin market.
If the sellers do break the support at 46.34%, the first level of added support lies at 44.45% (downside 1.414 Fib Extension). This is followed by 44%, 42%, and 41.72% (downside 1.618 Fib Extension).
On the other side, the first signal of the bullish altcoin run fading is likely to be a rise in the BTC Dominance chart. The first resistance lies at 48%, and this is closely followed by 50% (bearish .236 Fib Retracement). Above this, resistance lies at 52.91% (March 2019 lows), 54.72% (bearish .55 Fib Retracement), and 56.77% (bearish .618 Fib Retracement).
Previous Technical Analysis
At CoinCodex, we regularly publish price analysis articles focused on the top cryptocurrencies. Here’s 3 of our most recent technical analysis articles:
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- Price Analysis: Top 3 Coins To Watch From May 3rd – UNI, REN, & ICP Where Are They Heading? (Bullish)
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