Last week, Bitcoin Dominance (BTC.D) surged to 49.2%, marking its highest level since April 2021. This upward trend has prompted concerned investors to flock back to Bitcoin, leading to increased demand on crypto exchanges. As BTC gains momentum, the question arises: will it overcome the resistance at $27,000 and continue its ascent?
Bitcoin Dominance Hits Two-Year Peak
Since June 5, BTC.D has witnessed a two-percentage-point increase, reaching 49.30%, a level not seen in two years. BTC.D measures the percentage of the global cryptocurrency market's valuation comprised by Bitcoin's market capitalization. The sharp rise in BTC.D indicates a shift in market sentiment away from altcoins, as investors show diminished interest in them. This sentiment aligns with the 13% decline in the altcoin market capitalization following the US Securities and Exchange Commission's lawsuit against Binance on June 5.
Historical Patterns and Investor Behavior
Historically, BTC prices have often experienced surges in response to sudden spikes in BTC.D. If altcoin prices continue to decline, this pattern is likely to repeat, offering BTC holders the prospect of further price upswings in the coming weeks. To validate this hypothesis, crypto traders are increasingly placing buy orders for Bitcoin, as indicated by the order books of various exchanges. Currently, there is a supply shortage of 3,000 BTC across exchanges, intensifying upward price pressure as buyers compete to fill their orders quickly.
Critical Resistance at $27,000
Despite the bullish outlook, IntoTheBlock's In/Out of The Money Around Price (IOMAP) data suggests that BTC may encounter initial resistance around the $27,000 mark. Approximately two million investors, who purchased 866,000 BTC at an average price of $27,055, could trigger a pullback in this zone. However, if BTC successfully surpasses this resistance level, it could pave the way for a climb towards $29,000, a level not seen since April.
Potential Bearish Scenario and Support Zones
On the other hand, if BTC unexpectedly drops below the critical support zone at $25,200, the bullish price recovery may be invalidated. However, the presence of 350,000 investors who acquired 206,000 BTC at a minimum price of $25,212 is likely to prevent such a drop. Nevertheless, in the unlikely event that the support level fails to hold, BTC could retrace further towards $23,500.
Upcoming Interest Rate Decision
It is important to note that the United States Federal Reserve will announce its next interest rate decision on June 14. As a result, strategic whale investors may refrain from making significant trades until this announcement, as it could have implications for the crypto market.
With the altcoin market facing uncertainty and investors seeking refuge in Bitcoin's censorship-resistant qualities, BTC's price dominance is expected to increase in the coming weeks. While initial resistance at $27,000 may pose a challenge, successful clearance could lead to further gains towards $29,000. Conversely, a drop below the critical support at $25,200 could undermine the bullish outlook. Traders and investors should also consider the upcoming interest rate decision by the United States Fed when making their strategic decisions.
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