- Bitcoin dominance has broken above an almost four-year resistance level
- The move could signal that Bitcoin is about to take market dominance back from altcoins
- What happens during the rest of 2020 could be critical for early 2021 direction
Bitcoin dominance has broken above an almost four-year resistance level, suggesting that it may be about to run riot against alt coins. Bitcoin dominance fell dramatically during the 2017 bull run and only started to recover in 2018, with that recovery leading to the breakout, aided by institutional investors ramping up the Bitcoin hype this year. But what does this mean for BTC, and more importantly alts in 2021?
Bitcoin Dominance Reclaims Key Level
As we can see from the below chart, Bitcoin dominance has been in a steady decline ever since altcoins enjoyed their first mass rally in February 2017, after Bitcoin matched its all-time high from the previous rally in 2013:
Bitcoin dominance bottomed out during the January 2018 alt rally, since when it has made a steady recovery but has been unable to break above this line of resistance despite repeated attempts. This situation was reversed yesterday however when it finally broke through and immediately used the resistance as support:
At the same time, several alts dropped below support on their Bitcoin pairings, with alt season beacon ETH looking particularly bad:
Given that the ETH/BTC pairing is the best indicator of where we are in the alt cycle, it’s pretty clear that any hopes of an alt season Christmas have been dashed.
The fact that Bitcoin has managed to overcome such a long standing line of resistance is not really surprising when you consider just how much focus it has grabbed in recent months. Bitcoin is the only cryptocurrency being talked about by those outside the ecosystem, as well as being the only one being bought up en masse by institutions, and this renewed focus began at a time when Bitcoin had already undergone three and a half years of recovery in terms of Bitcoin dominance.
Rest of 2020 Crucial for Dictating Early 2021
What happens to the Bitcoin dominance for the rest of 2020 is crucial to both Bitcoin and alts going into 2021. Should the newly flipped resistance continue to act as support then we will very likely continue to see Bitcoin dominate alts into January and start the year rampaging towards $30k.
If however the Bitcoin dominance falls back underneath the trendline in the coming days, and this is matched by ETH/BTC reclaiming its wedge, then alts may yet have a stab at a January rally.
Whatever happens in the short term, it’s clear that Bitcoin’s overturning of this resistance that has stood since February 2017 is hugely important in the dynamic of the space moving forward.