Bitcoin is well above its previous all-time high, but the “old season” when altcoins explode compared to the top-ranking cryptocurrency is yet to come.
BTC dominance, a metric that weighs all other crypto assets against Bitcoin, is facing a crucial monthly closing price that could jeopardize the chances of a stronger rebound in the altcoin market. Therefore, the future of alts like Ethereum, XRP and others depends on the month-end closing in December 2020.
Bitcoin dominates interest in the crypto market. Will Altcoin Season Ever Return?
Rewind to any point in the past three months when a bullish bitcoin neared $ 20,000, and most cryptoanalysts out there during the last market cycle expected the alt season to come almost immediately after hitting the previous all-time highs of the highest cryptocurrency would take place.
That moment has come and gone, but altcoins were only struck once for it. Many altcoins are increasing in USD value, which represents positive price growth.
In switching to the same altcoins that are traded against BTC, few have managed to perform anywhere near as good as Bitcoin.
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A strong bitcoin while altcoins struggle leads to increasing BTC dominance. The total market capitalization for crypto is around 636 billion US dollars, of which Bitcoin accounts for exactly two thirds and is currently 66.7%.
At the lowest BTC.D value ever, altcoins only left Bitcoin a third of the market share, but the tables have since turned. And since Bitcoin is more bullish than ever and has an entirely different asset class behind the capital that flows into crypto altcoins, there is a risk that it will only make up a fraction of the total crypto market cap.
The MACD indicator will close above 66.7% | with a December close bullish cross Source: CRYPTOCAP-BTC.D on TradingView.com
Three technical indicators suggest that BTC dominance will soon rise and the alts will continue to destroy
The first of the bullish (for Bitcoin) signals that could push Altcoins further into a bearish state is the MACD for the monthly time frames shown above. The short-lived DeFi Summer of Love colored the histogram red again for the first time since July 2018, but since December the histogram has turned green again.
Simultaneously with the histogram, which is tilting bullishly, there is also a bullish crossover of the two moving averages shown on the MACD. The last bullish crossover triggered a dominance from about 40% to 70%, and another crossover is now forming. A monthly close is required to confirm the crossover, so altcoin bulls still have time to stop the Big Bear Bitcoin from beating them further down.
BTC dominance above mid BB could confirm an upward spike Source: CRYPTOCAP-BTC.D on TradingView.com
Next, the Bollinger Bands show in monthly periods how much Altcoins are currently threatened with extinction. A closing price above or below the moving average of the center line can be used as confirmation to buy or sell.
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Assets closing past the center line often cause price action to mark the other side of the band. This means that if December ends above the mid-line, it is likely to retest the top band and dominate over 70%. If the midline doesn’t close, the old season could finally hit the crypto market.
Ichimoku is giving bullish signals, but BTC.D needs to get its head above the clouds Source: CRYPTOCAP-BTC.D on TradingView.com
If the BTC dominance can close outside the Ichimoku cloud in December, all bets on altcoins will likely be void for the time being. If assets are trading above the Tenkan-Sen (blue line and corresponding arrow), they are considered bullish.
The Tenkan-Sen above the Kijun-Sen is also a signal that an uptrend is underway. The meaning of each crossover is shown with red and green arrows.
Closing above the cloud or “kumo” on the Ichimoku indicator in monthly periods on BTC.D would be a signal of doom for altcoins. However, the remaining source of hope also resides in the cloud itself.
The kumo predicts future price movements and in this case the red cloud may indicate a bearish price movement for BTC.D. If the December monthly close at BTC.D is above any major level, expect Altcoins to remain bearish compared to Bitcoin. But if things turn around from here and the ending falls under one of those crucial zones, an old season could finally come.
Featured image from deposit photos, charts from TradingView.com