Bitcoin News Today: Bitcoin Dominance Dips 5.3% as Altcoin Season Signals Strengthen

Bitcoin dominance has recently shown signs of weakening after hitting a multi-year resistance level near 64% and recording a bearish engulfing candle on the monthly chart. This development marks a key technical reversal, aligning with patterns observed prior to the 2021 altseason surge [1]. The bearish engulfing candle effectively encapsulated the gains of the previous month, signaling a potential shift in market momentum [2].

The bearish trend is further supported by the Moving Average Convergence Divergence (MACD) indicator, which has crossed into bearish territory on the monthly timeframe. This follows a similar setup in 2021, when a bearish MACD cross occurred alongside a bearish engulfing candle, leading to a sharp decline in Bitcoin dominance and a corresponding rise in altcoin activity [1]. The latest MACD histogram has turned negative after months of flat movement, reinforcing the bearish outlook [2].

Historically, Bitcoin dominance has been a key indicator of capital flow within the cryptocurrency market. A sustained drop in this metric typically signals a shift in investor preference from Bitcoin to alternative cryptocurrencies. The current structure suggests that Bitcoin is operating within a long-term descending pattern, with each rally into the 64% resistance level ending in rejection [1]. The most recent rejection, which brought dominance down to 60.7%, indicates increased selling pressure and a potential realignment of market capitalization [2].

Technical indicators now show a strong resemblance to the conditions that preceded the 2021 altcoin season. During that period, altcoins gained significant market share within months of the dominance decline. A similar pattern could be emerging, with capital rotation into altcoins potentially gaining momentum in the coming months [2]. While Bitcoin remains the largest cryptocurrency by market capitalization, the current alignment of technical signals suggests that altcoins may be poised for a stronger role in the market.

The drop in Bitcoin dominance has also been accompanied by bullish price action in select altcoins, further supporting the potential for a broader altseason. On-chain data and price movements across major altcoins indicate growing investor confidence in the sector [3]. If Bitcoin dominance continues to fall below critical levels, it may serve as a confirmation signal that the next phase of the crypto market cycle is underway [3].

Source:

[1] Altseason Brewing, as Bitcoin Dominance Mirrors 2021 Crash (https://coinpedia.org/price-analysis/altseason-brewing-as-bitcoin-dominance-mirrors-2021-crash/)

[2] Bitcoin Dominance Faces Rejection, Potential Altcoin (https://www.bitget.com/news/detail/12560604903655)

[3] XRP, ETH, Cardano (ADA) Signal Major "Alt Season" Is Here (https://coinedition.com/xrp-eth-cardano-ada-alt-season-rally/)