We mentioned four indicators, and as we promised to explain them, we prepared this article about the indicators.
❶. The first indicator: Bitcoin dominance
❷. The second indicator for investing in alternative currencies:
ETH/BTC pair
❸.The third indicator: Total3 indicator
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❹.The fourth indicator: Others
① First, the first indicator: Bitcoin dominance
The first indicator to watch while investing in altcoins is Bitcoin dominance. This is simply because Bitcoin is the largest currency in the cryptocurrency market. As such, this currency represents the majority of the market capitalization.
• The natural thing is that as Bitcoin's market dominance declines, capital will go elsewhere.
What you want to do here is to start selling your altcoins when this indicator drops too low.
• Bitcoin's dominance is currently around 53%. This means that for every billion dollars that enters the market, around half of it goes to Bitcoin.
• This means that there is not much opportunity for altcoins to grow in this climate.
➫ But it is noticeable that if we open the Bitcoin dominance chart for the year 2021, we see that there was a sharp decline in dominance, and this explains to us the crazy increases in the market at that time.
➫ That’s why the Bitcoin Dominance Index is expected to start declining after hitting 60%. This means we are very close to the crazy altcoin surge.
② Second indicator for investment in alternative currencies:
ETH/BTC pair
When investing in altcoins the second indicator to watch is the ETH/BTC pair.
• This indicator measures the strength of Ethereum's performance against Bitcoin.
• Ethereum is the largest alternative currency after Bitcoin.
So when it gains strength against Bitcoin, it's usually a good sign that the altcoin market is starting to pick up.
➫ Note on how Ethereum is currently performing against Bitcoin, is it considered weak or strong? If the performance is weak, this explains why altcoins are exposed to very heavy selling in the market whenever there is any decline.
The best thing that can happen is that a bottom is formed at strong levels and then the price of Ethereum starts to increase more than Bitcoin.
• It will lead to the upcoming altcoin season and that is why we always recommend keeping an eye on this indicator in order to manage your altcoin investments.
③ Third, the third indicator: Total3 indicator
➫ The Total3 indicator is one of the most important indicators to watch in the cryptocurrency market. This indicator is a measure of the strength of alternative currencies except for Bitcoin and Ethereum in the market, but it also shows alternative currencies.
• Therefore, it cannot be relied upon alone.
④ Fourth indicator: Others
➫ This indicator is a bit similar to the previous one, but the difference is that it does not include #stablecoins.
➫ It also represents the 125 largest currencies in the crypto market excluding Bitcoin, Ethereum and stablecoins.
• Through this indicator, we can identify the capital that enters alternative currencies, and unfortunately not all of them, but this indicator is still very important.
➫ We always recommend monitoring this indicator in order to start selling currencies when this indicator crosses the top and starts forming a new top and this time it may reach $1 trillion and may even exceed it.
➲ Advice or note
If you want to use these indicators efficiently when investing in #alternative_currencies, you must first monitor them constantly. Here we recommend monitoring the weekly or at least daily frame, as these indicators are not influential in the short term, but only in the long term. Also, monitor the previous support and resistance areas and the highest and lowest points in each market cycle.
