At long last, altcoins may be able to gain some ground against Bitcoin, which has been absolutely slamming practically every other crypto asset for a year now. Let’s take a closer look.
Bitcoin Dominance Poised to Falter
Ever since the start of this recent surge, Bitcoin dominance, the percent of the cryptocurrency market’s capitalization that is sourced from BTC, has surged higher. In fact, since the start of 2019, this figure has rallied from 52% to just shy of 70%, which, in a market worth hundreds of billions, is a move worth paying attention to.
However, as the Bitcoin price has entered a “chop” over the past few weeks, with BTC finding itself stuck between $9,500 and $12,000, altcoins have started to show influxes of strength. This is purportedly culminating in a rising wedge in the Bitcoin dominance chart, which, for those unaware, is a technical pattern that often sees the asset/trend break lower. Rising wedges are marked by tightening ranges and a decrease in momentum.
This trend was first spotted by Josh Olszewicz of Brave New Coin. Olszewicz has previously spotted rising wedges on the chart of Bitcoin, for instance, that was followed by a breakdown and move to lower levels.
That’s not all, a Telegram technical indicator group that posts charts recently noted that the weekly Bitcoin dominance chart on TradingView recently flashed a sell nine for the TD Sequential indicator. This strongly implies a strong trend reversal for altcoins against BTC, which has the potential to last for a number of weeks.
As popular trader The Crypto Monk half-jokingly wrote on Twitter, “Alt Season, Alt Season, Altseason, Altseason.”
Altcoins Have Further to Fall
Despite the clear technical signs of an impending “altseason”, sentiment and fundamentals seem to be weighing in favor of Bitcoin. Per previous reports from Ethereum World News, 70% or more than two-thirds of nearly 4,900 respondents to a Twitter poll believe that the altcoin carnage isn’t complete. The remaining 30% think that this subset of the crypto asset class has finally bottomed.
Also, it is clear that institutions are centering their efforts on Bitcoin, not altcoins. In May, Grayscale Investments, a key branch of the New York-based crypto conglomerate Digital Currency Group, released its “Digital Asset Investment Report” for Q1 of 2019. According to the report, Grayscale pulled in over $42.7 million over the first three months of this year. This isn’t a hefty sum per se, what makes this notable is that over 95% of the $42.7 million went to its Bitcoin Trust.
You can see a similar trend with the cryptocurrency-focused financial vehicles already on the market, or those that are looking to come to market. Look no further than the incessant stream of crypto-backed exchange-traded fund (ETF) applications. Notice how nearly all of them are 100% Bitcoin.
And with the SEC clearly ramping up its attempts to crack down on big-name cryptocurrency projects, which has resulted in the devaluation of the digital assets involved, altcoins may have more room to fall.