Bitcoin Dominance & The Bigger Picture

Bitcoin Dominance Continues To Rise

Although there are a number of altcoins that have performed relatively well during this pump, the majority are bleeding against BTC. That’s right, it’s not only the Bitcoin price that is rallying but also the Bitcoin dominance. BTC is currently outperforming alts, and this trend looks likely to continue. Taking a look at the BTC.D chart below reveals how Bitcoin dominance has surged by almost 10% in a little over a week.

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If you are like me and have a few passive income mechanisms generating BTC, a reversal in terms of dominance strength is likely to be a good opportunity to move out of BTC and into alts. Converting your BTC to alts at a local top for BTC.D ultimately secures more coins for your buck. For those unfamiliar with the effect of BTC.D, the higher the dominance, the fewer sats you require in order to purchase altcoins.

Bitcoin dominance is measured against altcoins as a basket, meaning that this is an average, in relation to altcoins. Some altcoins may offer more of a bonus, while others less. In dollar terms, most alts have seen price appreciation. However, in the same breath, most have lost ground in terms of satoshi value. Even if the Bitcoin price were to correct from here, altcoins are likely to correct even more.

This would ultimately cause Bitcoin dominance to remain at fairly high levels. Alts are in a bit of a jam when regaining strength against BTC.D. Just like with any recorded price action on a chart, one can wait for reversal and correction signals in the charts. Regular readers may be wondering why I appear to be bullish in regard to BTC after being so bearish for such an extended period.

Bullish Or Bearish?

The answer is I am still medium-term bearish. Last year I pointed out that a banking collapse was likely to occur in 2023, as well as the fact that it was likely to drive BTC significantly higher. I am honoring my own prediction because I know the event has the power to move the market. Honestly, it happened a little earlier than I was expecting. This, for one, makes the decoupling from traditional markets appear to be a done deal. However, it is still very much associated with an isolated event.

Secondly, a broader market collapse is still likely to affect Bitcoin in the short term. However, if this banking crisis turns into a full-blown banking collapse, Bitcoin is unlikely to be affected by anything. It’s all of these dynamics, and others, that are “allowing” the possibility of further upside. Then there is the FOMC outcome, which I address, amongst other things in my most recent post.

I had envisioned a stock market correction prior to a banking collapse. However, traditional markets have been more resilient than expected. This ultimately suggests that BTC is in for another very short, yet severe correction. If BTC moves above $30K and hammers around between $30K and $40K, there are at least new support levels being built.

Final Thoughts

Personally, I am choosing to play it cool, when it comes to being actively engaged in the market. I have my levels and am waiting for clear confirmations. Furthermore, a negatively interpreted FED announcement could even cancel a $30K Bitcoin, at least for now. Catch you next time!

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