Altcoins have been surging since the start of 2020, bitcoin dominance has dropped nearly 7% as coins such as Ethereum, Chainlink, and BAT see double digit gains. Looking at the bitcoin dominance chart (CRYPTOCAP) we can get clues as to when we can expect bitcoin to surge back as traders take altcoin profit to accumulate more BTC.
Looking at the 16 Day chart, we have run three different Fibonacci extension to try and find confluent levels where the market could react.
The first measurement is the entrancement levels from the huge altcoin surge in 2017 when Bitcoin dominance dropped to 37%. Bitcoin dominance later retraced to the 0.618 Fibonacci level at 75%. Based on this measurement we have significant levels at 60% (0.382) and 0.618 (75%). This level was confirmed by acting as resistance for the most recent correction.
The second measurement is a Fibonacci extension measuring the impulse wave from 37% up to 60%, and the subsequent retracement back to the 0.618 level at 50%. Based on this measurement, we see another 0.382 fib level around 60%.
The third measurement is a retrace from the entire rally from 37% to 73%. This measurement also shows a 0.382 retracement level around 60% as well as the 0.618 golden pocket around 50%.
Based on the confluence found between these three measurements, it becomes obvious that Bitcoin dominance sees significant activity near the 37%, 50%, 60%, and 75% levels. Not surprisingly, these levels are very similar to the Fibonacci numbers 0.382, 0.50, 0.618 and 0.786.
What to watch for
Taking a look at the 4D chart we can see that the trend line supporting the most recent rally has been violated. The RSI is also becoming oversold near the 0.382 fib support zone. Its possible we could see one more altcoin surge, forcing Bitcoin dominance down into the 60% range.
It can be assumed that a bounce will occur at the 60% range, if at the very least the retest the blue trend line, if not end up a bear trap and break new highs above 73%. If the 60% level does not hold, altcoins could see massive gains, pushing Bitcoin dominance down to the 50% level.
Based on RSI and multi-timeframe analysis, its more likely that Bitcoin dominance bounces at the 60% level. This will give altcoins a chance to recharge before going higher.
One thing to notice on the 16D chart is that overall bitcoin dominance looks rather bearish. If Bitcoin dominance does manage to bounce at the 60% level, its possible a retest of the trend line or recent highs at 73% will be rejected and dominance falls to 50%.