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Bitcoin dominance index could plummet

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Bitcoin Dominance and when to buy/sell Altcoins

Bitcoin dominance index could plummet

Bitcoin dominance index could plummet
CONTENT

  • Bitcoin Dominance Index makes bearish breakout of long-term upward support line.

  • On the daily chart MA formed a “dead cross”.

  • The BTCD index is now showing a direct correlation with the bitcoin rate.

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The Bitcoin Dominance Index has made a bearish breakout of the long-term upward support line, and strong resistance blocks the path to the north.

Bitcoin dominance index could plummet

We do not rule out the possibility of a “relief rally” in the short term, but in a longer time horizon we expect to see a decline in BTCD.

Bearish breakout of the support line

On June 23, the Bitcoin Dominance Index (BTCD) made a bearish breakout of the long-term upward support line that had been on the chart since February 23. Now the market is trying to form a bullish candle on the daily chart, but the path to the north is blocked by strong resistance.

The 50- and 200-day moving averages (MA) formed a bearish crossover, representing resistance for the bulls. In addition, the daily RSI has bounced off the 50 mark twice already. If the index starts to rise and tests the aforementioned MA and / or upward support line, it will also cause the RSI to rise to 50, from where the indicator is likely to rebound..

If BTCD continues to decline, it should receive support at 64-64.5%.

Popular trader @TheEWguy, who specializes in technical analysis using Elliott waves, suggested that the Bitcoin Dominance Index could take one goodbye northward and then decline significantly:

Bitcoin dominance index could plummet

Are you bad at Elliott Wave Analysis? Not sure how to apply it? Join the discussion in our Telegram channel – and you will find out everything!

Recall that we recently talked about the forecast of the leading developer Blockchair, which predicted that the BTC dominance index would no longer be able to recover above 66%, and bitcoin itself would lose its status as the world’s main cryptocurrency..

Channel and correlation with bitcoin

On the shorter-term chart, BTCD is trading within either a downtrend channel or a wedge. In addition, the index bounced off the minor support area of ​​65.5%, which allowed the market to kick-start gains on June 4.

Further dynamics of BTCD will depend on whether it breaks below the area of ​​this support or breaks the channel’s resistance line. Accordingly, the index can either fall to the support area of ​​64-64.5%, or start a rebound (“relief rally”), as suggested by the results of the Elliott wave analysis.

As for the current correlation of the BTCD index with Bitcoin, then, as we noted earlier, in June there is a complex relationship between them. In the period from June 5, these two indicators showed a direct correlation – an increase in one of them caused an increase in the other. However, for 8 days, from June 13 to June 21, the opposite situation was observed: the fall in the MTC rate provoked an increase in the bitcoin dominance index.

However, since June 22, the direct correlation seems to have resumed. This means that for the growth of altcoins in tandem with bitcoin, a decrease in the BTC rate is necessary..

Bitcoin dominance index could plummet

Thus, the BTCD index can arrange a short-term rally, but in the end it will still go into a decline phase.

Disclaimer

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