The Bitcoin Dominance Rate (BTCD) has been decreasing since the beginning of the year and is approaching a long-term support area at 58%.
Technical indicators and the wave count suggest that BTCD will continue its descent until it possibly breaks down.
Long-Term Levels
BTCD has been moving downwards since being rejected by the 71.5% resistance area in Jan. 2021. The decrease has been swift, and BTCD has nearly reached the long-term 58% support area.
BTCD has not traded below this level since Apr. 2020.
If it breaks down, the next closest support areas are found at 54% and 50%, respectively. These are the 0.5 & 0.618 Fib retracement levels of the entire upward movement, starting from 2018.
Technical indicators are bearish, supporting the possibility that BTCD will fall to the 58% area and potentially break down.
Current Movement
The daily chart provides some mixed signals. BTCD is currently trading between the 0.618-0.786 Fib retracement levels, which is a likely area for a reversal to occur. However, the ongoing bounce has been weak.
While there was a bullish divergence in the RSI which preceded the minor bounce, the RSI has now generated hidden bearish divergence, invalidating the previous bullish one.
While the Stochastic Oscillator has made a bullish cross, the MACD line is considerably below 0.
Therefore, while there are some bullish reversal signs, they are not sufficient to invalidate the bearishness in the weekly time-frame.
Wave Count
Cryptocurrency trader Altstreet Bets (@Altstreetbet) outlined a BTC dominance chart, stating that the pullback is complete and alts will now move upwards.
The long-term wave count suggests that BTCD is in the C wave of an A-B-C corrective structure (white).
The two most likely levels for the wave to end are found at 58% and 48% respectively.
The 58% level is a long-term support area and would give waves A:C a 1:1 ratio.
The 48% area is a confluence of levels, being the 1.61 external retracement of wave B, the 0.618 Fib retracement of the entire upward move and would give waves A:C a 1:1.61 ratio.
At the time of writing, we cannot determine which is more likely.
The sub-wave count (orange) suggests that BTCD is in the final portion of the downward move which would complete the C wave.
The Fib projection on sub-waves 1-3 gives a target near 57%, aligning with the first target from the previous image.
If BTCD extends, it could reach the 48% area, but as it stands, 58% seems more likely.
Conclusion
To conclude, BTCD is expected to resume its downward movement towards 58% and potentially lower towards 48%.
For BeInCrypto’s latest Bitcoin (BTC) analysis, click here
Disclaimer
All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.