The dominance rate of Bitcoin has increased since reaching a low of 61.98% on February 15. During this period, the Bitcoin price has dropped by about 15%.
Highlights of Bitcoin dominance
- The dominance rate has broken down the support line gradually increasing by 756 days.
- A death cross happened on January 23.
- There is a resistance of 66.5%.
- There is support at 58.5% and 53%.
February 26 was a sad day for the Bitcoin bulls as the BTC price created a huge red candle and dropped from $ 9,327 to $ 8,823. However, Bitcoin's dominance rate has increased during this period. This is to be expected, since Bitcoin price and its dominance are in an inverse relationship, as we reported in our previous analysis.
If Bitcoin price continues to decline, it is likely that the dominance rate will increase. Because the price of altcoins will often decrease at a faster rate than Bitcoin, if this actually happens then it will be the end for buying altcoins.
The famous Trader Income Sharks tweeted a chart of Bitcoin dominance and stated that altcoin devotees would love to see Bitcoin's dominance rate denied at the current level.
ALTS would want to see $ BTC dominance get rejected here. Possible dead cat bounce if it does. A continuation and break above here could mean alts have more to drop. pic.twitter.com/M2rJWcfZBM
– Income Sharks (@IncomeSharks) February 25, 2020
Let's analyze this chart closely and determine if this ratio is actually rejected or not, or it will move upwards to blow away the altcoin season that traders have been waiting for so long.
The support line is ascending
On February 6, Bitcoin's dominance rate was broken from a support line increasing gradually after 756 days of existence.
The price is currently trying to get it back, but was rejected a bit and made a wick on.
Major resistance is found at 72%.
Chart of Bitcoin dominance rates | Source: TradingView
The daily chart shows it will continue to decline.
First, a death cross between the 50 and 200-day moving average (MA) was created on January 23 and the dominant rate is trading below both MA lines.
Second, the current movement looks like a retest of the area of 66.5% is the resistance level. Combining this with the breakdown below the long-term support line, we can guess that the domination rate will be rejected near the current levels and decrease thereafter.
Bitcoin daily dominance chart | Source: TradingView
Future movement
If the Bitcoin dominance rate drops as expected, then the nearest support area is found at 58.5%. If this level does not hold, then the next support level is found at 53%.
While we expect the price to drop to the first support zone, it is too early to make predictions as to whether it will continue to fall to the second zone, as the Bitcoin halving event takes place. in May is approaching.
Chart of Bitcoin dominance rates | Source: TradingView
Conclude
Bitcoin's dominance rate has been broken below a long-term ascending support line and is currently in the process of confirming it as resistance. Thereafter, it is expected to decrease until at least one of the above support areas is reached.
Bitcoin price today | Source: Coinmarketcap
Disclaimer: This is not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
Sn_Nour
Bitcoin Magazine | Beincrypto
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