Why Bitcoin Dominance Suggests Alt Season Is Still Many Months Out

Bitcoin price is only $ 2,000 away to hit a new high and shock the world that the cryptocurrency rose like a phoenix from the ashes again. The currently flaming hot cryptocurrency is the talking point of the financial world and has resulted in altcoins suffering significantly in the past few weeks.

While much of the cryptocurrency community expects the alt season to follow the moment when Bitcoin corrects and consolidates, the BTC dominance could predict that the altcoin trend could take many months to improve. The metric that measures cryptocurrency’s first growing market cap versus the rest of the crypto industry says this about altcoins.

The Bitcoin rally Epic 2020 leaves Altcoins at risk of surrender

Bitcoin is trading at $ 18,000 and its total market cap has hit a new high from its 2017 high. All signs point to a prolonged Bitcoin bull run, after perhaps another correction.

The last time the first cryptocurrency went parabolic, altcoins followed. There were two different altcoin seasons, one during the first run and another when Bitcoin hit its all-time high and retail investor FOMO flooded altcoins with capital.

The mainstream hadn’t heard of Bitcoin, let alone Altcoins. With BTC trading at psychologically expensive prices, and with the average investor finding solace in whole rounded numbers, altcoins seemed like the better option. The appeal of spotting the next bitcoin early on has driven retail towards alts, and they have only suffered since then.

The BTC dominance fell from over 90% to just 35%. The rally peak in 2019 caused altcoins to stagger and lead to a dominance of around 72%. Now, depending on its dominance, BTC accounts for exactly two thirds of the total crypto market capitalization.

Related reading | Bulls In Control: The total Bitcoin market capitalization hits a new all-time high

Bitcoin has attracted a new class of investors who have almost no interest in most of the altcoins, who nowhere near the promise, attractiveness, acceptance, and regulatory acceptance as BTC.

When smart money comes in made up of billionaires, hedge funds, corporations, and more, they will focus solely on BTC. In the current economic environment, the benefits of Bitcoin as a safe haven and insurance policy are seen, while Altcoins carry significant risk of capital loss.

Altes like Ethereum, XRP, Litecoin, and the tried and true coins could also benefit from this, but tokens in the lower ranks may have been forgotten. The only salvation is another wave of retail investors looking for the next BTC and another old season. However, this could be a significant way out technically, and not just in terms of current sentiment.

A possible breakout of a four-year trendline on BTC.D happens with a close on Sunday night | Source: CRYPTOCAP-BTC on TradingView.com

Five BTC Dominance Charts That Suggest The Alt Season Is Moving

Pure technical data does not look promising for Altcoins due to the BTC dominance. The metric that measures Bitcoin with all other Altcoins puts the cryptocurrency at around two thirds of the total market share of the crypto market.

The graph above shows what appears to be a breakout of a trendline that saw Altcoins gain some ground for the first time, with Bitcoin going back to early 2017.

btc domiance ichimoku

The breakout is supported by the Ichimoku cloud, but the candle must close to confirm | Source: CRYPTOCAP-BTC on TradingView.com

The fact that the price movement is currently in high periods of time above the Ichimoku cloud gives the breakout credibility and validity. Closing above the cloud would lead to a sharp rise.

Related reading | Bitcoin approaches the top of the accumulation zone, the parabolic phase begins with the breakout

In the chart below, the monthly BTC.D chart also closes above the center line of the Bollinger Bands. The metric rose another 30% above the moving average on the last close and usually guarantees at least a whiff of the upper Bollinger Band, which is currently at its 2019 highs.

Why Bitcoin Dominance Suggests Alt Season Is Still Many Months Out

Altcoins have until the end of November, to prevent dominance from soaring to the top of the Bollinger Bands | Source: CRYPTOCAP-BTC on TradingView.com

Although there are five charts in total, the final chart contains three more signals that are extremely bearish for altcoins. The Relative Strength Index is nowhere near oversold and has recently broken out of a downtrend line, allowing the top cryptocurrency to rip against alts.

For the first time since April 2019, the MACD is tipping over crossover bullishly. The histogram turned green for the first time since March 2018 when the last major altcoin season ended.

Bitcoin dominance btc d

The RSI, MACD, and volume all point to further BTC crypto market dominance | Source: CRYPTOCAP-BTC on TradingView.com

Altcoins have never fully recovered since 2018, and the rising volume at BTC.D suggests that the trend of favoring Bitcoin over altcoins is only strengthening.

For the naysayers who claim that the dominance of the charts is worthless, the ETHBTC chart, which is often used to measure the strength or weakness of altcoins versus BTC, provides signals that are the reverse of anything pointing to a deep breakdown in Ethereum as BTC hits new all-time highs.


The Ethereum ratio against BTC also suggests altcoin capitulation is coming | Source: ETHBTC on TradingView.com

The next two weeks are particularly important for altcoins and face a ricochet or dice situation against the just blooming Bitcoin bull trend.

If the two-week close of trading on Sunday evening and the monthly November close are at or above current levels, the old season may be delayed indefinitely or at least for a few more months until retail is sucked in again.

Featured image from Deposit Photos, Charts from TradingView.com