Even as Bitcoin has, for the last three months, surprised most with its astonishing price rise (which might now be taking a breather), altcoins – i.e., everything other than Bitcoin – have been mostly taking a back seat during the more dramatic moments of the uptrend.
Although this may someday change, it has been and remains so that Bitcoin’s movement dominates the cryptoasset markets. When Bitcoin is doing something dramatic on the charts, going up or down, the altcoin markets are usually sent into disarray.
Bitcoin’s recent break above ten, then twelve, then up to nearly $14,000 is a perfect illustration of this effect. Altcoins, even huge ones like Ethereum, Litecoin, and XRP, were heavily sold off in favor of Bitcoin. Altcoins’ prices versus fiat may even remain flat, or even rise, along with Bitcoin’s rise even as these huge selloffs occur, as has been the case for the past couple weeks.
But every once in a while, Bitcoin’s dominance of the market fluxuates. Wild swings in the past have given the altcoin markets spurts of profitability, although only a few altcoins ever stand the test of time.
Bitcoin seems to have finished climbing against altcoins, for now, and the pendulum may be swinging the other way.
Where Do We Stand?
The Bitcoin dominance chart below paints a picture of the leading crypto’s historic relationship with the rest of the crypto market, ever since 2017 when altcoins actually made up a decent chunk of it.
During 2018, the 50% barrier has marked so-called “alt seasons,” where altcoins thrived and saw significant gains. Alternatively, 2017’s alt seasons took far less of the market share, even if the price volatility was even greater than 2018’s seasons.
Through the latter half of 2018, no similar fluctuation has been seen – Bitcoin has held the majority of market share through the brutal crypto winter of 2018, up until now. At one point during the very start of 2018 (the main “alt season”), altcoins held 65% of the market’s capitalization.
What is notable about the current state is that Bitcoin dominance appears to have been contained right at the chart’s most critical inflection point: from about 65-70% dominance. It seems that only a new all-time-high could break this level.
A Closer Look
We will zoom into the three day dominance chart for a better look (at about 20 bars, the three day is perhaps the most appropriate range). What we are looking for is signs of strength, or lack thereof. And if we look very closely, we can find some signs of flagging strength – but not especially flagrant signs.
We can see that on the recent dominance spikes during Bitcoin’s rallies, the indicators are barely keeping up. The Histogram (bottom pane) actually showed a clear bearish divergence, while the RSI showed a very slight divergence.
In either case, Bitcoin’s dominance seems to be losing strength at the top. Going much more granular, to the four hour, we see what looks like a collapsing dominance – meaning the three day peaks will probably stick.
There is a high likelihood, based on the Bitcoin’s history, that a price retracement will give altcoins more share of the dominance chart. Altcoins may increasingly start to feel the love, making gains such as ChainLink’s (LINK) more common.
The views and opinions expressed here do not reflect those of CryptoGlobe.com and do not constitute financial advice. Always do your own research.