Bitcoin's dominance is beginning to weaken: will the altcoin season begin?
Date: 2023-07-15 Author: Karina Ziganova Categories: BLOCKCHAIN
The market capitalization of altcoins (ALTCAP) has grown significantly and bounced off the downward resistance line. This was accompanied by a decline in the Bitcoin Dominance Index (BTCD).
Technical analysis of the short-term and long-term timeframes shows that the ALTCAP rally is likely to continue. The situation with BTCD, meanwhile, looks uncertain.
Hope for the altcoin season is back again
Technical analysis of ALTCAP on the daily timeframe gives bullish readings. On June 15, the index bounced off the horizontal support zone of $500 billion, and two weeks later bounced off the descending resistance line. This indicated that the previous correction had come to an end. Then ALTCAP returned to the support line, after which it accelerated the growth rate.
The daily RSI confirms the breakout and supports its continuation: the indicator is above 50 and moves upwards.
ALTCAP is currently trading above the 0.618 Fibonacci resistance level at $600 billion. The principle behind Fibonacci retracement levels suggests that after a significant price movement in one direction, it retreats or partially returns to the previous level before continuing to move.
If growth continues, ALTCAP may update the annual high of $700 billion, however, if closed below 0.618, the index will go to test the nearest support at $540 billion.
Bitcoin's dominance index began to decline
In early June, the bitcoin dominance index broke out of the 48% area, and by the end of the month it reached a new annual high of 52.15%. However, after that, BTCD was rejected by the 0.382 Fibonacci resistance level and is currently in the process of forming a large bearish weekly candlestick.
If the decline continues, the indicator may fall again to the area of 48%. The reaction to this level will determine the direction of the future trend. A rebound will help BTCD resume its uptrend and reach 58%. A breakout will mean that the previous breakout was false and will lead the index to new lows.
Despite the short-term bearish outlook, a close above the yearly high of 52.15% would mean that the trend remains bullish.
