Bitcoin Dominance Reversal Spells Trouble for Alts

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  • Bitcoin dominance looks to be on the rise as the price increases
  • A double bottom has formed over the past five months
  • Alts could be crushed if Bitcoin goes for all time highs and beyond

Bitcoin dominance levels have long been an indicator of where the market currently is in the cycle. Over the past few years the Bitcoin dominance chart has developed a very clear pattern with regard to the strength of Bitcoin and alt coins, and that chart is now showing a definite trend reversal. With alt coins having out performed Bitcoin since late December, it’s evident that Bitcoin is preparing to decimate alts once again.

Bitcoin Dominance Suggests Alt Season Over

Bitcoin dominance has been bouncing between 41% and 48% since the market crash in May, following five months of downtrend, during which alts put in three and sometimes four-figure gains. This alt season, which began when Bitcoin hit $32,000 on January 3, was not a surprise to those who have been following the Bitcoin dominance chart:

btc dominance 1

As we can see, Bitcoin dominance has obeyed the same pattern since 2017, with Bitcoin enjoying a price spike in bull markets and taking the dominance up to the 70% mark, before topping out and allowing alts to play catchup.

When Bitcoin dominance hits the 40% mark this typically indicates that alts have had their time. Bitcoin dominance typically then reverses and creeps back up again, although this doesn’t always match with prices – Bitcoin dominance rose from 39% to 72% between May 2018 and September 2019 when Bitcoin was in a bear market.

Bitcoin Dominance Key Levels

So what can we expect from this point on? Bitcoin has been threatening to make moves on its all time high of $65,000, with almost all alts suffering as a result. This is indicative of a shift in momentum, but there are a couple of key levels to look for on the way up:

btc dominance 2

If Bitcoin dominance rises through the next area of resistance at around 50%, its next stop looks to be at the 60% level – a huge 10% leap. This would almost certainly take it to new all time highs, while breaching the next two barriers at 60% and 68% would likely usher in $100,000 bitcoin, and potentially represent a good reversal point.

On the other hand, if Bitcoin dominance rejects at 50% we could well see a continuation of the downtrend, with the January 2018 lows of 36% being tested. However, the double bottom put in since the May crash looks like the perfect springboard for Bitcoin to regain some dominance after over 10 months of alt gains.