The following is an analysis of the view that "Bitcoin's weekly MACD and RSI top divergence may trigger an outbreak of altcoins":
What does technical indicator divergence mean?
MACD top divergence: The weekly MACD top divergence of Bitcoin's market share means that the upward momentum of Bitcoin's market share is gradually weakening. Although the price may still rise or remain high, the indicator shows that the internal upward momentum is not as strong as before, suggesting that Bitcoin's market share may face a correction or decline in the future.
RSI top divergence: RSI has a weekly divergence, which also shows that the strength and speed of Bitcoin's market share increase are slowing down. When the RSI indicator is inconsistent with the price trend, it is a signal that the market trend may reverse, indicating that Bitcoin's dominant advantage in the market may be about to change.
Correlation with Altcoin Surges
Market Dominance Angle: Bitcoin dominates the cryptocurrency market. When its market share shows signs of peaking, some funds may flow out of Bitcoin to seek other investment opportunities. Altcoins are often seen as having higher potential returns, so once Bitcoin's attractiveness declines, funds are likely to flow into altcoins, providing financial support for altcoin surges.
- Market Sentiment Angle: Technical indicator divergences can affect market sentiment. When people see these negative signals from Bitcoin, they may lower their expectations for Bitcoin and turn their attention to altcoins. If this behavior is widespread, it can create a market trend that drives altcoin prices up, triggering altcoin surges.
- Historical Experience Angle: Historically, in the cryptocurrency market, after indicators like divergence appear in the late stages of Bitcoin's rise, there often comes an opportunity for altcoin performance. For instance, in the bull markets of 2017 and 2021, the market share of Bitcoin declined in the later stages, and altcoins experienced explosive growth.
However, the cryptocurrency market is very complex, with numerous influencing factors. It cannot be determined solely based on the MACD and RSI divergences of Bitcoin's market share that altcoins will definitely surge. Other factors such as regulatory policy changes, macroeconomic environment, and significant technological breakthroughs must also be considered.
