Bitcoin Dominance Rate’s Sharp Decrease Suggests Altseason Has Begun

Bitcoin Dominance Highlights

• The Bitcoin dominance rate broke down from a symmetrical triangle.
• A death cross has transpired.
• The weekly RSI suggests that we are in a bearish market.
• There is support at 60 percent.

Bitcoin charter @davthewave outlined the Bitcoin dominance chart, which has been rapidly decreasing, with the caption “You know what this adds up to.” He is likely implying that it adds up to the beginning of ‘altseason.’

You know what this adds up to….🙂 pic.twitter.com/k8CdRbDlWW

— dave the wave🌊🌓 (@davthewave) February 6, 2020

Let’s take a closer look at the Bitcoin dominance rate and attempt to determine its future movement.

Bitcoin Dominance Death Cross

The Bitcoin dominance rate had been trading inside a symmetrical triangle since July 20, 2019. After moving from support to resistance and vice versa several times, it finally broke down on January 15. The rate validated the support line as resistance on January 30 and has been rapidly decreasing since. During this time, the 50- and 200-day moving averages (MAs) made a bearish cross (a death cross), indicating that the previous bullish trend has ended and a new bearish trend has begun. Since December 2017, this death cross has transpired twice prior to the current one. The first time, the rate decreased by 39 percent in 25 days, while the second time it decreased by eight percent in 60 days. Currently, the rate has decreased by six percent in the 24 days since the cross occurred. Based on this alone, we can make the assumption that it will continue to decrease. Below, we will attempt to determine until when will it do so.

Future Movement

The Bitcoin dominance rate has been decreasing since January 3, when it reached a high of 71 percent. This area has been providing resistance to the price since September 2019. With the recent acceleration of this decrease, we can assume that the rate was unsuccessful in moving above this area and is now decreasing towards support. The closest support area is found near 60 percent. A very interesting observation that can be helpful in determining the future trend comes from the weekly RSI. In September, it reached a high of 84, deep into overbought territory. The only other time it was this overbought was in 2016, prior to the rapid decrease that was known as the previous ‘altseason.’ In addition, the RSI has since fallen below the 50-line, suggesting that the dominance rate is in a bearish market. Therefore, while the Bitcoin dominance rate is expected to reach the 60 percent area, the decrease might not stop there. Rather, the area will only offer a temporary bounce. To conclude, the Bitcoin dominance rate broke down from its pattern of consolidation. Along with the bearish readings from technical indicators, this makes us believe that the rate will continue to decrease at least until it reaches the support area at 60 percent — and possibly more.