What a wild day in the cryptocurrency market today. Usually weekends are rather quiet lately, but today the crypto currency market was on fire. XRP was the clear leader in the market with a maximum intraday price increase of about 33%. But also other altcoins, like BCH (+16%), XLM (+16%), MIOTA (+24%) or ADA (+12%) surged in price, while Bitcoin’s price remained almost unchanged. Just a few days ago, I wrote an article (Are Altcoins On The Verge Of A Breakout?) in which I explained that the chart of Bitcoin’s dominance provides strong indications that altcoins may break out soon to start a new altseason. In this article I will provide an update on this thesis.
Is this already the beginning of the breakout we have been waiting for, or is it still to come?
Bitcoin dominance chart
In my previous article, I mentioned that Bitcoin’s market share resides at the upper trend line of a long-term downward trend channel in the range of 66-67%. Let’s take a look at the chart of Bitcoin’s dominance (= Bitcoin’s market share) once again.
For this analysis I have zoomed into the chart in order to provide you more details. As you can see, since approximately one year, Bitcoin’s market share has not exceeded the upper trend line of the trend channel. Of course, it was just rejected again. This is a strong bearish signal for Bitcoin’s market share (not Bitcoin’s price) and the recent rejection has led to a massive surge in altcoin prices. Meanwhile, Bitcoin has been able to defend its price level of approximately $18,600.
In addition, Bitcoin’s market share was not able to exceed the 0.5 Fibonacci retracement level on the weekly time frame. A weekly close below the 0.5 Fibonacci retracement level would create another bearish case for Bitcoin’s dominance.
Will Bitcoin reach a new all-time high before the altseason starts?
Is this already the beginning of the next altseason? It may be, but I have my doubts. The 2017 altseason begann when Bitcoin surpassed its previous all-time high. Thus, I think there is a chance that we will see a similar behavior this time as well. At the very least, the drop in Bitcoin’s market share today provides enough room for another surge in Bitcoin’s price to exceed its previous all-time high, while Bitcoin’s market share does not exceed the upper trend line of the trend channel. This could lead to a double top structure and a renewed rejection of Bitcoin’s dominance and would create an even more bullish signal for the altcoin market. In the following you will find a chart that incorporates this idea. But the chart structure drawn from my side should not be considered valid, either in terms of percentage levels or time frame. This is just an idea.
Anyways, I am bullish on altcoins. If they take off now, before Bitcoin surpasses its previous all-time high, or later, I will take it. In the following you will find the chart of the total altcoin market capitalization (= market capitalization of all cryptocurrencies excl. Bitcoin).
Since the market crash in March this year, which led to a double bottom structure, altcoin market capitalization has followed an upward trend channel and has already exceeded 2019 highs of ~$140 billion. Thus, we are already creating higher highs in the chart, which is a bullish signal for altcoins in general. For now, there are no signs of a trend reversal visible in the chart. Interestingly, the upcoming major resistance levels are perfectly in line with Fibonacci retracement levels:
- ~$205 billion = 0.382 Fibonacci retracement level
- ~$257 billion = 0.5 Fibonacci retracement level
Alright, I will keep this article short, because I just wanted to provide a quick update on my previous post, considering the latest information from the markets. Be aware of potential corrections.
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