Bitcoin was explosive throughout 2020, and while certain altcoins like Ethereum and a number of DeFi tokens have outperformed the top cryptocurrency this year, altcoins have been an overall disappointment when compared to previous cycles.
Those who had lived through past cycles expected altcoins to take off the moment Bitcoin topped its previous high. But that moment has come and gone, and while there has been some positive momentum, the asset class as a whole is lagging BTC. This is reflected in BTC dominance, which could end in 2020 with a dangerous-looking Doji candle, signaling “indecision” and potential fate for altcoins in 2021.
Indecision of the crypto market: Bitcoin dominance closes 2020 with a doji candle
From the bottom of the cryptocurrency bear market to current prices, altcoins have stayed in the bitcoin dust. The leading cryptocurrency by market capitalization has led the bullish move, trading nearly $ 10,000 above its previous all-time high.
But altcoins are nowhere in sight and not even in the back view of Bitcoin. The divergence in capital flow between the two types of crypto assets has caused BTC dominance – a metric that measures the top crypto asset versus other altcoins by market capitalization – to rise to 70%.
Related reading | Ripple Lawsuit Triggers XRP Led Altcoin Apocalypse
With a 70% dominance, the year started roughly the year, despite the roller coaster ride of a year in 2020. Because the interval between annual opening and closing can be so small, there is a risk that the annual candle will close as a doji.
A red doji could be in the BTC dominance map 2020 | to be left behind Source: CRYPTOCAP-BTC.D on TradingView.com
Doji are dangerous because they signal indecision and make the choice of direction less clear. They are at the top of trends when they reverse or close to resuming when a market takes a breather.
The six month candle pictured below shows that the 70% dominance has worked as a strong resistance level in the past and why it is currently such a challenge to break. It could also be a point where dominance flips over, bitcoin bleeds or stagnates, and altcoins shoot into the sunset.
Unfortunately, there are other technical and fundamental factors that suggest this won’t happen in 2021.
Six month resistance could soon be flipped in support Source: CRYPTOCAP-BTC.D on TradingView.com
The technical and fundamental reasons for the upcoming altcoin apocalypse
If you keep zooming out to quarterly candles below, the 70% level seems ready to break. A closing price above the resistance level would cause a sharp spike and bring BTC dominance to 80 and 90%.
The idea may sound unreasonable for all projects in the crypto market compared to Bitcoin, but the mood around altcoins is getting worse and worse.
The quarterly charts suggest that resistance will soon break at 70% dominance Source: CRYPTOCAP-BTC.D on TradingView.com
Altcoins haven’t recovered nearly as well as Bitcoin and may never do so again. The assets are not, in the view of some investors, an “institutional product” and institutions have so far focused primarily on BTC.
Few have fulfilled any of the promises made three years ago, while Bitcoin has embraced an entirely new narrative that has gained wide acceptance. Failure to produce any type of FOMO like last season, even after BTC hit its all-time high, makes the owners question their position.
Is an ascending triangle on BTC.D about to destroy altcoins? | Source: CRYPTOCAP-BTC.D on TradingView.com
And while that could change and traditional funding could target DeFi tokens as well, the SEC’s recent attack on crypto via Ripple could be the fatal blow to altcoins that rockets BTC dominance.
According to well-known industry analysts, the SEC is sniffing other altcoin projects and companies, and it may be shooting more shots in the industry throughout the new year.
Related reading | Analyst: Post Bitcoin, traditional finances are pouring into DeFi, not Ethereum
The price movement due to the fact that institutes are so optimistic about Bitcoin compared to altcoins could create a massive, multi-year ascending triangle pattern for BTC dominance. And if that pattern trips up, altcoins are doomed to fail in 2021.
Featured image from deposit photos, charts from, TradingView.com