Approach Altcoins With Caution: Bitcoin Dominance Paints Foreboding Pattern
Following Bitcoin’s big breakout weeks ago, altcoins have been rallying left and right. Several majors, mid, and small-cap altcoins have outperformed the first-ever cryptocurrency by a large margin. All that may soon turn around, however, according to a foreboding bottoming pattern that may be forming on BTC dominance charts.
If the pattern confirms, altcoins are in for another major collapse at the hands of Bitcoin.
Adam and Eve Bottom On BTC Dominance Could Deal Altcoins A Crushing Blow
BTC dominance is a metric used to weigh Bitcoin against all other altcoins in the cryptocurrency space. However, crypto analysts often use it to perform technical analysis just as they would any other price chart of financial assets. Plenty of pundits argue the benefit of doing such, but still, its commonly looked at to gain an overall perspective on the market.
Bitcoin long ago enjoyed the lion’s share of the crypto market dominance, at well over 90%. The crypto bull run and bubble in 2016 caused the metric to slide all the way to a low of 35% in January 2018 – just as the bubble began to burst.
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Altcoins have steadily bled out since, culminating in a BTC dominance peak at 73% in 2019 as Bitcoin touched $14,000 per coin. After that high was set, altcoins have been recovering.
A breakdown in dominance recently led to an eruption in altcoins dubbed an alt season, driven in part by DeFi tokens, decentralized oracles, and major altcoins like Ethereum, XRP, and others.
But that breakdown may have formed a foreboding bottoming pattern, that if confirms, will crush alts back to valuations not seen since before the bubble.
BTC Dominance Weekly Adam and Eve Bottom | Source: TradingView
Bull Flag Patterns Match Similar Breakout Target If Bitcoin Outperforms Alts
According to BTC dominance charts on one-week timeframes, an Adam and Eve bottom may be forming. The pattern also appears to be a high timeframe fractal, repeating already after the metric bottomed out in 2018.
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Adam and Eve bottom formations are a type of double bottom, where a sharp, V-shaped pattern serves as the first bottom, followed by a rounded bottom of a similar degree.
Targets are taken from the bottom to the high point of the pattern, putting future BTC dominance targets at as high as 80%.
BTC.D Weekly Bull Flag Pattern | Source: TradingView
Another take on technical analysis shows what appears to be yet another massive bull flag responding to the lower trendline of the chart pattern. If BTC.D bounces here, altcoins could see a strong correction.
And if the upper trend line breaches, altcoins are in for another round of devastation due to Bitcoin outperforming the rest of the market.