The DeFi boom and explosion of ROI on altcoins helped bring the positive sentiment back to the crypto industry and helped push Bitcoin over $ 10,000 and set the key for the longest haul ever hold.
But while altcoins had lost some ground again against the most dominant cryptocurrency, the BTC dominance may have reversed, and if the weekly ends above a key level, altcoins could be decimated by the end of the year and by early 2021.
Closing BTC dominance over the Mid-Bollinger Band could crush altcoins into satoshi dust
Bitcoin price is flirting with $ 12,000 resistance again as the rest of the financial world collapses around it. Shares are falling, gold suffered a minor setback, and altcoins bleed out as investors swap the tokens for BTC.
The rotation of capital from altcoins back to bitcoin could be the reason for the leading cryptocurrency's recent strength by market cap while the rest of its finances are on the verge of faltering.
Climbing bitcoin dominance while alts are suffering clearly shows this process in action. Profit-taking from the summer of DeFi gains has kept Bitcoin stable despite a string of negative news, exchange hacks, and more.
A weekly closing price above the moving average of the middle BB could be a sell signal for Altcoins Source: BTC.D on TradingView.com
When combined with institutional and corporate money, Bitcoin could outperform the rest of the crypto market, but it all depends on a weekly closing price above mid BB.
Related reading | Five signs Bitcoin dominance has hit rock bottom: are Altcoins going to zero?
Previous instances where BTC.D was able to close above mid BB – the moving average from which the Bollinger Bands are calculated – resulted in a strong uptrend that decimated the Alts.
Bitcoin Bull Run could leave alts behind, just like 2019
The last time BTC dominance broke and left altcoins behind was in 2019 when Bitcoin exploded to a high of $ 13,800.
The leading cryptocurrency by market cap is more bullish this time around and only has a resistance level of over $ 12,000 to deal with before setting a new all-time high.
Investors know this and could shift capital from altcoins to bitcoin, as BTC.D shows.
Past weekly closes above the mean BB movement result in an average movement of 38% Source: BTC.D on TradingView.com
The last two weekly candle closings above the middle of the BB resulted in a spike in the top Bollinger bands and an average increase of 38%. Another surge of similar stature would bring BTC.D to a dominance of 83%.
Related reading | Bizarre correlation between bitcoin dominance and the discovered dollar
Such a drop would completely wipe out the entire 2017 crypto bubble and the impact of altcoins on the price hike. In this case, altcoins could continue to be crushed to dust despite the rising Bitcoin valuation.
Featured image from deposit photos, charts from Tradingview.com