It's been over 2 months Bitcoin has been rangebound, and has been trading between ~$29k to 41k (till mid-June), and ~$29k to $36k (at the time of writing)
While everyone is confused about where Bitcoin is headed, and the focus has been shifted away from altcoins, it's time to look at something which might trigger another alt season soon.
Here's the Bitcoin daily chart for reference:
Important levels have been marked on the chart (not considering diagonal trendlines as of now)
Even though there is some resistance on Bitcoin as of now, the weekly candle might just close bullish and change the scenario, so we should definitely keep that in mind before taking any trade.
The volatility has been going down since 17th May.
Now if you are a trader who bets on volatility, you might have made a sizeable profit by shorting move contracts in the last two months, so congrats :)
The easiest way is to just short 'Move contracts' on FTX. (Here's my affiliate link: https://ftx.com/#a=beehivetrader).
But again, if you do not understand how they work, please DO NOT attempt to trade on these without understanding the risks. Shorting move contracts involve significant risk, and I'd personally advise trying with the bare minimum amount if you want to try.
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Anyway, coming back to why we might see an altseason:
Bitcoin dominance printed a neat symmetric triangle pattern in the last two months (while Bitcoin has been trading sideways.
We missed it out, right? No one's talking about it ;)
Breakout or breakdown of this dominance is imminent.
In case you are not sure what this means, here's a gist:
Bitcoin dominance is the relative dominance of Bitcoin in the whole market. (If Dominance is more, it means Bitcoin will have a greater market share with respect to the entire cryto market.)
Dominance Chart (1D):
Now there are two outcomes definitely, and the last time there was a head and shoulders pattern, dominance broke down from ~61 levels to almost 39, which triggered a massive alt cycle, where a lot of altcoins posted gains of over 1000-2000%.
Considering the past trend, since the dominance has been in a downtrend, there is a chance this can be a bear pennant, and we might break down (probability is more).
In case it breaks down, well, supports are marked below.
If we go below 35 (the last all-time low support, when altcoins made record-high gains back in early 2018), we are going to create history.
Here's the weekly chart with the historical supports and resistances:
So, do watch out, and grab some solid altcoins in case you see this breakdown. Avoid being greedy though :)
A walkthrough on how to read dominance and understand alt cycle:
| BITCOIN TREND | BTC.D (Dominance) | Altcoins |
|---|---|---|
| UP | UP | Relatively Stable on USD, but down with respect to BTC |
| SIDEWAYS | UP | Altcoins losing with respect to BTC, and slow grinding down with respect to USD |
| DOWN | UP | Altcoins will get super REKT (Rapid decline) |
| UP | DOWN | Altcoins will moon like crazy and will gain rapidly with respect to both Btc and USD |
| SIDEWAYS | DOWN | Altcoins will gain with respect to Btc, and will show decent gains on USD pair as well |
| DOWN | DOWN | Altcoins relatively stable with respect to USD, but will gain with respect to BTC |
Best time to enter/long Alts: When Bitcoin is bullish, and the dominance is declining.
Best time to exit/short Alts: When Bitcoin is bearish, and dominance is bullish.
Catching a trend early is the key. IF you are too late, it's better to stay out.
I hope this helps. If this article is useful, share this in your circle, and/or sign up with my affiliate links on the below exchanges:
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