BTCD Gets Rejected, Could Offer Relief Altcoin Rally

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In Brief
  • BTCD is following a descending resistance line.

  • Technical indicators are undecided.

  • The relationship with BTC is positive.

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The Bitcoin Dominance Rate (BTCD) has been moving upwards since reaching a low in May.

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Despite the bounce, it is possible that a local high has been reached and BTCD will fall towards new lows.

Long-term descent

BTCD has been moving downwards since January 2021, when it reached a high of 73.63%. The downward movement continued until a low of 42.68% was reached in May. 

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BTCD bounced afterwards, and has reached a high of 48.69% so far. The high was made very close to the 0.382 Fib retracement resistance area when measuring the most recent portion of the downward movement. 

Technical indicators are showing some bullish signs, such as the increasing RSI and MACD histogram. 

However, the RSI is still below 50 and the MACD is negative. In addition to this, the Stochastic oscillator has not made a bullish cross yet.

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Cryptocurrency trader @Crediblecrypto stated that despite the ongoing increase, he expected BTCD to eventually fall and reach a new all-time low. However, he suggests that a move towards 50-55% is in the cards first. A look at a lower time-frame is required in order to determine if this will transpire.

Source: Twitter

BTCD follows resistance

The daily chart shows that BTCD has been following a descending resistance line since the aforementioned January high. 

Currently, it is right at this resistance line, making its third breakout attempt. 

However, technical indicators are neutral, leaning on bearish. The MACD is showing decreased momentum and is right at the 0 line. The RSI is at the 50 line, while the Stochastic oscillator has already made a bearish cross.

Chart By TradingView

The most likely possibility suggests that BTCD is currently in wave four of a bearish impulse, which has taken the shape of a fourth wave triangle.

While it is possible that it develops into a different corrective pattern, the presence of the descending resistance line indicates that it is likely that a high has been reached. 

If so, potential targets for the end of the downward movement would be near 33-34%, found using a Fib projection on waves 1-3 (orange) and the length of wave 1 (black).

Chart By TradingView

Relationship to BTC

The relationship between BTC (orange) and BTCD (green) was positive from July 9 to 12, meaning that an increase in the BTC price also caused an increase in BTCD. 

However, it seems to have turned negative since, indicating that an increase in the price of the former is causing a drop in the latter.

Therefore, in order for BTCD to hit the previously outlined target, BTC would have to continue moving upwards.

Chart By TradingView

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.
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Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona graduate school of Economics. Shortly after graduating, he began writing for several different cryptocurrency related websites as a freelancer before eventually taking on the role of BeInCrypto's Senior Analyst.

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