- Bitcoin has broken out of a month-long descending wedge at the fifth time of asking
- Should it hold above the resistance, $40,000 and higher is on the table
- Alt coin holders should be wary of a Bitcoin dominance reversal
Bitcoin has broken out of the descending wedge it has been trapped in for almost a month and has closed above it, suggesting that the downtrend is broken and the bull run might be about to continue. This would be bad news for alts, although there may be some life left in them yet, as long as Bitcoin doesn’t repeat its heroics of late 2020.
Bitcoin Breaking Out
Bitcoin has been engaged in a descending wedge since topping out at $42,000 in early January, dipping to a low of $29,000:
It seemed as though this wedge was going to continue throughout February, giving alts a further chance to run, but a show of strength since hitting $29,000 on January 27 has seen it put in higher lows and higher highs, including the Elon Musk Bitcoin pump, resulting in a break above the line of resistance offered by the descending wedge.
While this breakthrough is welcome news for those who feared that Bitcoin was on course to test the low $20,000s, caution still remains. A daily close at least is required to be bullish again on Bitcoin, with a weekly close being the ideal confirmation point.
Should Bitcoin hold above this resistance line, the next resistance is $40,000, with all time highs at $42,000 the next breakthrough to be targeted.
Alt Season Closing Early?
Happily for alt holders (which is just about everyone at this point), the Bitcoin dominance level didn’t swing massively in Bitcoin’s favour as might be expected:
Ethereum is also continuing to lead Bitcoin since breaking out of its own long-term wedge, which also suggests alts have the upper hand. Looking at the bigger picture though we can see that it might not be long before Bitcoin starts to enjoy another resurgence over alts:
As we can see, there is a little room left for alts to enjoy, but Bitcoin dominance has been in a sharp downtrend for almost a month, taking it down to a support level that started over three years ago. It is more likely then, especially given Bitcoin’s apparent reversal of fortunes, that this line will hold and Bitcoin will regain some dominance as it heads toward $40,000 again.
The only hope for alts in the medium term is if Bitcoin fails to hold above the resistance line of the descending wedge, which would likely see it fall back to the lower range again. Otherwise it might be time to be looking to cash in some of those alt gains for Bitcoin.