We will start the market analysis today and this week with the same key metric - BTC dominance.
Let us remind you, we are looking for confirmations (and refutations, but we wouldn't like to see them) that the growth of dominance from December 3rd to December 20th is merely a bounce on the way to a global and aggressive decline of dominance in this cycle. Because in the current conditions, dominance can only fall on the rise of altcoins.
On December 9th, we wrote a congratulatory post with an important signal for the start of a global altseason, after which BTC began a correction, while altcoins experienced a real dump, dropping by a significant 20-30-50%. We assessed and continue to assess this as knocking out 'unnecessary passengers' from positions on altcoins.
What signals are currently available regarding dominance?
Negative (risk of further growth of dominance):
- The weekly candle closed above the Potential break level according to our indicator, at the level of 58.65%. This does not cancel the sustained downtrend of dominance, but it poses a risk. Although we do not expect a trend change of dominance to a sustainable uptrend on this time frame (which would equate to a shift to an altseason), it is worth considering. The signal is unfavorable, even taking into account the bearish shadow on the weekly candle.
Positive (indicating that the bounce is finished):
- On the daily time frame - three signals of a potential high and a strong bearish (for dominance) candle on December 20th,
- On the 2-day time frame - two out of three signals of a potential high and the penultimate candle - doji.
To confirm the reversal, it is important now:
- going below the same level of 58.65% (and as long as dominance is below this level on the weekly, that's already very good),
- going below the global trend support from November 2022 (dominance is currently on it, indicated by a dotted line),
- breaking the trend support - ascending from December 7th,
- going below 58%,
- going below the 50 EMA on the daily time frame (which is again 58%),
- going below the 0.5 level on the Fibonacci on this bounce (which is again 58.06%),
- to establish a sustained downtrend on the 2-hour and higher time frames.
And it is important not to break through the formed local resistance - the descending trend line from November 21st.