The Bitcoin Dominance Rate (BTCD) has been decreasing since Jan. 3 but is approaching a strong support level at 63.5%.
While a short-term bounce could occur, BTCD is expected to eventually reach this area.
Bitcoin Dominance Continues Slipping
BTCD has been falling since Jan. 3, when it was trading at a high of 73.63%.
The decrease has been swift, and BTCD has already reached the 0.5 Fib retracement of the entire upward move measuring from the Sept. 2020 lows, found at 65.44%. The next support area is found at 63.51%, the 0.618 Fib retracement level.
While BTCD is following an ascending support line, the exact slope of the line cannot be determined due to numerous long lower wicks.
Technical indicators in the daily time-frame are decisively bearish, indicating that the downward movement is likely to continue at least to 63.51%.
The shorter-term chart is more bullish since there is a pronounced bullish divergence in both the RSI & the MACD. This suggests that an upward move is likely, at least in the short-term.
Nevertheless, BTCD is clearly still in a downward trend and will be in one until it reclaims the breakdown level at 68.5%.
BTCD Wave Count
Cryptocurrency trader @TheEWguy stated that the price is in a bearish impulse and is expected to continue falling towards 63%.
It is likely that BTC is in the C wave of an A-B-C corrective structure (shown in orange below), currently being in sub-wave 3 (black).
It does seem that BTCD is in sub-wave 3 as outlined in the tweet.
If waves A:C have a 1:1.61 ratio, which is common in such corrections, BTCD would reach a low of 62.5%, aligning with the 0.618 Fib retracement level outlined in the first section.
An increase above 68.2% would confirm that the correction has ended.
While a short-term bounce is expected, Bitcoin Dominance is likely to resume its downward movement toward 62.5%-63.5%.