Bitcoin Dominance’s Gaps Left & “Golden Cross” on D Chart
BTC Dominance - Diversification Towards Bitcoin
BTC.D
Introduction
The following analysis focuses on the topic of the Bitcoin dominance - how it is appropriate to read the information and what it gives to the traders and investors, as well as what forecasts can be done based on analyzing the information of its values over time. The Bitcoin is the first cryptocurrency that appeared more than 10 years ago and since then it is truly dominating the global crypto market. Of course, in the beginning, it was just the Bitcoin and no other crypto currencies were existing. At this point of time there was no need of an indicator as the Bitcoin dominance. However, later on, by facing rapid expansion and having hundreds and even thousands of other secondary crypto currencies (called alts), there appeared a need for having an indication of what portion of the market is still held by the flagship crypto currency, compared to all the rest.
Bitcoin's dominance is moving within the range of 94.67% and 99% throughout the whole period of its inception until February 2017. From this moment on, the percentage of market dominance is sharply heading south. The solid 90%+ level is broken downside and for just a couple of months, the BTC dominance is almost twice reduced - down to 57% in the beginning of July 2017. Should this be considered as a new trend, a new wave, or a revolution that brings the industry to the next level? Relatively - yes, but at the same time this statement must be accepted with some reservations.
Diversification Towards Bitcoin
In a time of uncertainty at the financial markets, diversification from a risky to safer assets is something desired. When there is a world crisis ongoing, most of the fiat currencies such as “Euro”, “Japanese yen” or “Chinese yuan” become less attractive compared to the US Dollar. The US Dollar is providing safety due to its worldwide recognition and usage. Following the same logic, the Bitcoin, as the first official cryptocurrency on the market, got the right positioning and recognition in order to be the true dominator on the long run. The uncertainty around the current market situation is resulting in an aggressive escape back to the Bitcoin.
The lines on the Daily
BTC.D
chart are gaps that had been formed in the past. Technically, the gaps are those areas on a chart, where the price of the financial instrument moves sharply up or down, with little or no trading in between. As a result, the asset chart shows a gap in the normal pattern. On the Bitcoin chart, gaps were left around 96,4% and 72%.
Throughout the history of the stock market there is a rule that the gaps get filled sooner or later. By having gaps filled, the trend restores it’s old original direction. With all that said, from a technical perspective, the chart give us information that a retracement to 96,4% will take place. Fundamentally, a statement as that could be explained as a continuing switching back to Bitcoin, thus altcoins will get weaker and weaker in time compared to the oldest crypto asset. Furthermore, on the D chart from Figure , the 50-candle MA had crossed the 200-candle MA, forming this way the so called formation “Golden Cross”. Golden Cross indicates an incoming long-term bullish market in the near future. Technically, from this point, the 21MA, 50MA, and 200MA will play key support levels from where the percentages of BTC.D can easily bounce and continue rising.
Conclusion
The main reason for the creation of so much new altcoins from 2016 to the end of 2017 is connected with the euphoria stage around the Bitcoin. The crypto market had a need for new financial instruments to be used for diversification and maximising the profit. With the creation of new coins, some of them gaining more than 1000% return on investment (ROI), the euphoria stage became even more deceptive. After the market confirmed “Dead Cross” with the crossing of 50MA with 200MA, money started to flow from altcoins back to Bitcoin. The time of aggressive diversification has started. Technically, on figure 5 can be seen the open gap around the blue zone at 96.4%. At some point that gap must be filled The Bitcoin will return it’s domination over the market. That could be accomplished with continuing diversification towards Bitcoin with more growth or a coming correction over the whole market. In a short term Bitcoin Dominance will have to test 200MA on weekly chart, zone around 71% - 72%. Test of that area is crucial for how the altcoins going to act in the next 6 to 8 months. A retrace after testing the 200MA weekly is more than likely. Potential support zones will be 65.8% BTC.D and 62.7%. If the market could close a weekly candle over 72% and touches 74%, the growth of Bitcoin Domination will continue aggressively towards 84% and as final target 96.4%. If the support around 65.8% and 62.7% cannot hold, the next retracement zone should be 60% and 58%. In long term expectations are for continuing growth of Bitcoin dominance towards it’s end target of 96.4%. All of this points out to a situation of expected global trend for escaping from altcoins and turning back to the classical crypto asset until more developments are made in time.
BTC.D
Introduction
The following analysis focuses on the topic of the Bitcoin dominance - how it is appropriate to read the information and what it gives to the traders and investors, as well as what forecasts can be done based on analyzing the information of its values over time. The Bitcoin is the first cryptocurrency that appeared more than 10 years ago and since then it is truly dominating the global crypto market. Of course, in the beginning, it was just the Bitcoin and no other crypto currencies were existing. At this point of time there was no need of an indicator as the Bitcoin dominance. However, later on, by facing rapid expansion and having hundreds and even thousands of other secondary crypto currencies (called alts), there appeared a need for having an indication of what portion of the market is still held by the flagship crypto currency, compared to all the rest.
Bitcoin's dominance is moving within the range of 94.67% and 99% throughout the whole period of its inception until February 2017. From this moment on, the percentage of market dominance is sharply heading south. The solid 90%+ level is broken downside and for just a couple of months, the BTC dominance is almost twice reduced - down to 57% in the beginning of July 2017. Should this be considered as a new trend, a new wave, or a revolution that brings the industry to the next level? Relatively - yes, but at the same time this statement must be accepted with some reservations.
Diversification Towards Bitcoin
In a time of uncertainty at the financial markets, diversification from a risky to safer assets is something desired. When there is a world crisis ongoing, most of the fiat currencies such as “Euro”, “Japanese yen” or “Chinese yuan” become less attractive compared to the US Dollar. The US Dollar is providing safety due to its worldwide recognition and usage. Following the same logic, the Bitcoin, as the first official cryptocurrency on the market, got the right positioning and recognition in order to be the true dominator on the long run. The uncertainty around the current market situation is resulting in an aggressive escape back to the Bitcoin.
The lines on the Daily
BTC.D
chart are gaps that had been formed in the past. Technically, the gaps are those areas on a chart, where the price of the financial instrument moves sharply up or down, with little or no trading in between. As a result, the asset chart shows a gap in the normal pattern. On the Bitcoin chart, gaps were left around 96,4% and 72%. Throughout the history of the stock market there is a rule that the gaps get filled sooner or later. By having gaps filled, the trend restores it’s old original direction. With all that said, from a technical perspective, the chart give us information that a retracement to 96,4% will take place. Fundamentally, a statement as that could be explained as a continuing switching back to Bitcoin, thus altcoins will get weaker and weaker in time compared to the oldest crypto asset. Furthermore, on the D chart from Figure , the 50-candle MA had crossed the 200-candle MA, forming this way the so called formation “Golden Cross”. Golden Cross indicates an incoming long-term bullish market in the near future. Technically, from this point, the 21MA, 50MA, and 200MA will play key support levels from where the percentages of BTC.D can easily bounce and continue rising.
Conclusion
The main reason for the creation of so much new altcoins from 2016 to the end of 2017 is connected with the euphoria stage around the Bitcoin. The crypto market had a need for new financial instruments to be used for diversification and maximising the profit. With the creation of new coins, some of them gaining more than 1000% return on investment (ROI), the euphoria stage became even more deceptive. After the market confirmed “Dead Cross” with the crossing of 50MA with 200MA, money started to flow from altcoins back to Bitcoin. The time of aggressive diversification has started. Technically, on figure 5 can be seen the open gap around the blue zone at 96.4%. At some point that gap must be filled The Bitcoin will return it’s domination over the market. That could be accomplished with continuing diversification towards Bitcoin with more growth or a coming correction over the whole market. In a short term Bitcoin Dominance will have to test 200MA on weekly chart, zone around 71% - 72%. Test of that area is crucial for how the altcoins going to act in the next 6 to 8 months. A retrace after testing the 200MA weekly is more than likely. Potential support zones will be 65.8% BTC.D and 62.7%. If the market could close a weekly candle over 72% and touches 74%, the growth of Bitcoin Domination will continue aggressively towards 84% and as final target 96.4%. If the support around 65.8% and 62.7% cannot hold, the next retracement zone should be 60% and 58%. In long term expectations are for continuing growth of Bitcoin dominance towards it’s end target of 96.4%. All of this points out to a situation of expected global trend for escaping from altcoins and turning back to the classical crypto asset until more developments are made in time.