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Bitcoin: As we mentioned in a recent article, BTC is entering a very important stage historically. For the last week or so, Bitcoin has been flirting with the 70% market dominance level. It attempted to break above 70% last week and failed to do so with a brief sell-off to 68% levels. As of recent BTC has slowly moved up and again approaching 70% levels. If we take a look at the massive altcoin rally in 2017, it was all fueled once BTC rejected 70% dominance levels. Bitcoin followed off with a sell-off and altcoins rallied to all-time highs. We are looking at an identical scenario right now. We believe that if Bitcoin accepts 70% market dominance levels and inches towards 71%, you could see the “2nd leg” up for Bitcoin with a strong upward momentum. This could result with more BTC outperformance followed by altcoin sell-offs.
Altcoins showed some strong momentum the last couple days, but as BTC keeps recovering towards 70% dominance levels you are seeing altcoins cool off. It will be very interesting to see how this plays out. Right now Bitcoin is flirting with the 50 day moving average as well. It will be crucial to see if BTC can maintain and hold the 50 day moving average to support our rally theory. Dropping below the 50 day moving average ( green line ) could then support our theory of downside pressures to support levels at $9,839.
We also like to look at the RSI indicators on the chart. We can see that the RSI is hovering around 52 right now. This is actually a really nice spot to be in. When assessing the RSI, usually speaking with its at 75 or above that indicates “overbought territories”. In the current environment of 52, many will still argue this is a nice spot of being neither overbought or oversold.
$11,600: If Bitcoin accepts 70% market dominance, you could see a rally to test the $11,600 levels up the upsdie.
$9,839: On the flip side, if you see BTC reject 70% for a second time, it could fuel a sell-off to $9,839 support levels. This could then possibly fuel altcoins in the short term.
Historic Environment We Mentioned Above
Like we mentioned in our previous research, it’s very interesting to see the 70% market dominance levels being tested for Bitcoin. If we take a look at the figure below we will explain the situation again.
We can see in 2017, as Bitcoin rejected 70% market dominance, you saw a surge in altcoins, especially XRP and Ethereum. That’s why we consider this such an important time right now. With utility not kicking in yet for altcoins as expected, you probably couldn’t see as strong of a rally for altcoins but a smaller rally could still be coming to fruition. In our most recent market report where we talked BTC market dominance, we mentioned that a change in sentiment is occuring. With BTC again testing 70% dominance after a large sell-off in 2018, you are seeing an industry shift and larger players get interested in BTC again. There are many reasons for this, but BTC right now is becoming valuable as it needs to be acquired by all these entities that are rolling out Bitcoin futures. It could be a strong catalyst for the surge this year. In order for entities to roll out future products for BTC, the firms need to first build up their BTC inventory/holdings. This is our theory and we will see if there is any truth to it. The industry shift is also coming from the fact BTC is one of the only cryptos right now that has sufficient liquidity to support institutional adoption. The BTC rally and surge above 70% has stronger backing to it right now than altcoins in our opinion, but anything can happen in crypto. That’s why we are looking at a key scenario right now to see with direction it’s ultimately going to take.