Bitcoin dominance signals overheating – Which ‘dip’ should you target?
Two days ago, Bitcoin [BTC] dominance surged to an impressive 57%, following a daily gain of over 5% that pushed BTC above the $66K mark – a level it hadn’t breached in more than 150 days.
Now trading at $67,350, Bitcoin has risen over 10% in just one week. This rapid ascent has led analysts at AMBCrypto to speculate whether the market is nearing an overextension.
If this is the case, a pullback to a local low could occur before BTC attempts to retest its all-time high.
High bitcoin dominance signals overheating
In the past week, daily gains exceeding 2% have helped Bitcoin recover from its $60K slump, confirming the level as a new support.
Additionally, the surge was reinforced by a rising RSI, indicating strong momentum. Trade volume also spiked to a new local high, signaling increased support from retail investors.
As a result, Bitcoin dominance also climbed to a new high. However, this bullish momentum has pushed BTC into “greed” territory, hinting at potential signs of overheating in the market
Historically, a shift into greed often coincides with the phase in a cycle where Bitcoin hits a market top, frequently leading to a subsequent price crash.
At this stage, many traders exit, doubling down on their gains, while new buyers hesitate, fearing the inevitable correction.
Therefore, these traders usually wait for a dip-buying opportunity, capitalizing on the market bottom when Bitcoin dominance resurges.
Currently, with Bitcoin dominance at a new high and other signals pointing to a market top, Bitcoin may be primed for a correction.
This correction could shake out weaker hands, leaving fresh buyers to take advantage of a potential dip.
Bitcoin could retrace to a local low
Bitcoin previously faced rejection at $64K, which must be converted into support to signal the potential dip. This scenario unfolds when new interest perceives this price range as an attractive entry point.
