Altcoins have suffered double digit selloffs across the board in the past 48 hours as Bitcoin dominance has risen dramatically in line with a $700 move since Sunday. This has left Bitcoin dominance threatening to break out of its five-week channel which would cause more misery for altcoin holders, although they may get a reprieve if Bitcoin dominance gets rejected at resistance and continues to range.
Bitcoin Dominance Bounces of Support
Bitcoin dominance has been in a steady downtrend since May, during which time alts have staged a mammoth recovery. However, since hitting 58.8% at the start of September, Bitcoin dominance has been showing signs of bottoming out:
The surprise jump from 58.8% 10 days ago resulted in a mini altcoin crash, but the rejection at 62% and subsequent collapse back down support allowed them to recover. This has proved to be a short-lived recovery however rather than extension of alt season as the Bitcoin dominance has rallied off support, once again leaving altcoin prices once more heavily in red:
This double bottom has now established a very clear channel for Bitcoin dominance, stretching back some five weeks:
This has left the market in a delicate position, with Bitcoin dominance having seemingly bottomed out, or in the process of doing so, but no clear break of resistance yet arriving.
Alt Season on the Rocks?
The bullish scenario for altcoin prices is that the Bitcoin dominance gets rejected either here or at the channel top at 62% and falls back to the bottom of the range again, perhaps even collapsing through support and seeking further lows. This would only happen if Bitcoin endured a price crash from its current position at $10,750, which is not out of the question.
Altcoin holders won’t want to see Bitcoin dominance break through resistance at 61.8% as this would signal that Bitcoin dominance is set for a recovery, leaving altcoins in the dust. It would therefore be prudent to cut right back on altcoins if Bitcoin dominance does cross that barrier.
At Home in the Range?
The other scenario is that Bitcoin dominance continues to range for a while longer, hopping between the support and resistance:
This would make altcoin trading easier to plan, but as long as it doesn’t break through support, it would only be a matter of time before Bitcoin dominance eventually broke up and out.