Technical Analysis: Bitcoin Dominance and Its Relationship with Altcoins
The Bitcoin dominance chart in Renko format shows a clear correlation between overbought moments in the oscillator and significant pullbacks in dominance. These moments are highlighted with purple markers at key levels and are confirmed by the downward breaks indicated by the blue lines.
Historical Pattern:
1. First Overbought Zone (2019):
After reaching relevant highs (purple marker), the oscillator showed overbought conditions. This coincided with a downward break in dominance (blue line).
Outcome: Dominance retraced, and altcoins experienced a bullish period.
2. Second Overbought Zone (2021):
A similar structure formed at relevant highs. The crossover of the oscillator confirmed the downward break, driving a new retracement in dominance.
Outcome: Growth was observed in the altcoin market.
3. Current Situation (2024):
Bitcoin dominance is once again signaling an overbought moment, confirmed by the oscillator crossover (blue line) and the formation of a Weak High at 57.91%.
This pattern suggests a high probability that dominance will initiate a retracement similar to those observed in previous periods, which could favor a bullish movement in altcoins.
Conclusion:
Historically, every time Bitcoin dominance reaches overbought levels, a significant retracement occurs, creating a favorable environment for the altcoin market. Currently, the behavior of the oscillator and the break at key levels indicate that we may be at the beginning of a new cycle where altcoins take center stage.
Warning: This analysis does not constitute financial advice. It is important to conduct your own research before making investment decisions.
