Analysis: Bitcoin’s dominance is on the rise

Since the bitcoin price has been stagnant for a few days now, we will talk about bitcoin dominance in this review. This is the part of the crypto market that consists of Bitcoin. What can we conclude from this?

first the course

Let’s look at the big picture first. Below we see the monthly chart of Bitcoin. Here, each candle represents – you guessed it – a month. This chart is often used to analyze long-term movements.

We see here that Bitcoin has created three main zones that the price has historically reacted to. Bitcoin is now still between the two upper zones, where you also see an orange line. The latter is currently a minor resistance for BTC.

This has to do with the closing of the July candlestick. The orange line represents the price of this closed candle and if we zoom in we can better see that this price forms resistance for the coin. In the chart below we see the daily chart where each candle represents 24 hours.

Price got pretty much on that line only to be just below it. Bitcoin did not immediately descend to the middle blue zone. This could mean that the coin is preparing for a strong upward or downward movement.

the domain

Such unexpectedly difficult moves can have major consequences for the rest of the market in addition to Bitcoin. To explain this further, let’s take a look at the bitcoin dominance weekly chart. This is the part of the market that consists of bitcoin. Here we see that this percentage also maneuvers between two important zones.

In this image we see that Bitcoin’s market share is 44.65%: almost half, but what can we do with it?

What does dominance mean in combination with price?

Dominance in combination with price can produce 4 different scenarios for the rest of the market.

Dominance up, rate up

As dominance grows and so does the price, the rest of the market (alt and stablecoins) will not move much. It’s good to be with Bitcoin at times like this because the price is doing very well.

Domain up, price down

If dominance grows and bitcoin falls, it means a lot of money is being taken out of the market. If Bitcoin’s market share decreases and with it the price, this is the only logical conclusion. In such cases, it is better to stay away from it, especially if you like altcoins.

Dominance down, rate up

With declining dominance and rising bitcoin prices, that’s a different story. In this case, it means that Bitcoin is doing less well and there are more people in alt or stablecoins. Altcoins are a good investment compared to Bitcoin in these times, unless there is a lot of money in stablecoins.

Dominance down, price down

This brings us to the last scenario: a declining domain and a falling bitcoin price. In this exceptional case, there is not exactly an arrow to draw in the market. Bitcoin can fall if not much is happening in the market.

It is highly dependent on the percentage of the market that consists of stablecoins. This leads to two new insights. In this case, when there are many stablecoins and few altcoins, many people want to be left out, both bitcoiners and altcoin owners. Are there few stablecoins in percentage? Then Altcoins will outperform Bitcoin (a very special scenario).

What does the domain do now?

Now that you know this, let’s take a look at the daily bitcoin chart, but also the daily bitcoin dominance chart. The first picture is the track.

For example, here we can see that Bitcoin fell yesterday, but Bitcoin’s market share increased. As explained above – rising dominance and declining bitcoin – means money is being taken out of the market. In fact, altcoins fell faster than the market leader yesterday. Although the market share has increased.

This is not a sign of tomorrow. Still, through the overall trend, we can see Bitcoin’s price and dominance rising. This is usually a signal to hold onto bitcoin for a while as the coin rises and takes up a larger share of the market.

Editor wanted

Did you enjoy reading these articles and want to contribute to our content? We are looking for a new editor-in-chief with a deft pen and in-depth knowledge of the cryptocurrency market. View our vacancies here and respond immediately!