BTC loses its market dominance, and the subsequent impact is fermenting
BTC
Compared to the same period last month (04/04/21), BTC is currently only down 1.4% in price, although BTC has been fluctuating wildly during this period. Over the past month, BTC has seen a high of $64,000 and a low of $47,250. In the chart below, we can see the price action over the past month.
BTC/USD monthly price action
BTC short-term outlook
In the short term, BTC has completed the first phase of the correction after the falling wedge in mid-April. The chart below shows a descending wedge in mid-April.
BTC/USD descending wedge
BTC’s pullback phase after a falling wedge:
Phase 1 (A): Sharp pullback to around $58,000 - BTC hits $58,900
Phase 2 (B): Moderate pullback to around $53,000 - currently in progress
Stage 3 (C): Final moderate recovery to around $60,000 - future outlook
During the recent rally, BTC/USD formed a rising wedge, completing the EW pattern of (A), (B), (C), (D), (E). After completing the initial (A) move, BTC now looks set for a minor (B) pullback before moving further down to the -0.236 Fibonacci level of $53,700.
BTC/USD EWs
This chart analysis is supported by the Alligator indicator for BTC. As we see below, the BTC bulls have exhausted their energy in pushing BTC higher and have now entered a bearish move as the alligator's mouth opens.
BTC/USD alligator indicator
Through the combination of short-term EWs and Alligator indicators, we can expect the following movements. BTC should have a potential retest of the $60,000 level in the near term (and then fall again due to a medium-term bearish chart).
BTC/USD short term outlook
BTC mid-term outlook
First let’s look at BTC’s mid-term EWs. When looking at the EWs, it is clear that BTC is still in a corrective wave and BTC is not done falling yet.
Impulsive move: BTC moves from $17,000 to $58,200
Rising wedge movement: BTC moves from $58,200 to highs of $65,000
Corrective moves: BTC has moved from $65,000 to $47,000 (lows) so far and is now at $55,800. The corrective movement is expected to end at $43,800.
The chart below shows the outlook for BTC EW.
BTC/USD EW outlook
The RSI indicator is bearish first
Why has BTC seen a major drop this month? From a technical analysis point of view, the reason is that BTC broke below the descending wedge. However, what triggered the breakout of the wedge was a major RSI divergence on the daily chart of BTC. As we can see below, the top of the BTC candle is rising while the RSI is falling. During a bull market run, it is very common to see RSI divergence with two points of validation. However, BTC saw three points of validation in the RSI divergence, so a strong downtrend is expected. This then happened and BTC now has to fight the descending resistance on the RSI and will likely bounce off of this as BTC looks to reach the 30 level again.
Meanwhile, the RSI (although it has seen a bullish crossover) is bearish. This is because when combined with other technical indicators such as EWs, RSI and WAI, it shows a bearish outlook. Therefore, the MACD line may remain below the value 0.
BTC is bearish unless the MACD line moves above 0, the RSI breaks above the resistance line, and the daily BTC closes above $60,000.
BTC/USD – daily chart
BTC bearish, what's the impact on altcoins?
Currently, there is a clear trend emerging in the market. When BTC drops significantly, altcoins drop. When BTC surges, so do altcoins. However, altcoins rose significantly more than BTC, which led to a rally in altcoins, while BTC stagnated or generally declined in value.
The aftermath of BTC losing its market dominance is happening now. As we can see in the chart below, BTC’s market dominance has declined significantly since the beginning of the year.
BTC dominance chart
Looking at it overall, BTC dominance has dropped 36% since the beginning of the year, and with red candle after candle, it is clear that something is consuming BTC dominance. So here comes the question... Which altcoin is it?
BTC dominance continues to fall
ETH
ETH has seen huge gains in recent weeks, up 74% since mid-April. It is clear that ETH has been consuming BTC's dominance, perhaps BTC's parabolic pattern has now ended or paused, and investors are now rushing to the second largest cryptocurrency.
ETH/USD
ETH target price
With ETH reaching all-time highs at unprecedented speed, it is difficult to determine the end of its parabolic movement. However, in this bull market, the 1.618 Fibonacci extension has been very effective in identifying the approximate top of the parabolic move. The 1.618 Fibonacci extension is currently set at $4,086 (+19.23%). Therefore, between $4,000 and $4,250 is the target price for ETH in the short term.
ETH/USD
DOT
The last cryptocurrency analyzed in this article is DOT. After a parabolic run from late December ($6) to February ($40), DOT has been relatively quiet since late February, sticking to the $45-30 region.
DOT/USD line chart
DOT/BTC
When looking at the DOT/BTC chart, it can still be seen that DOT/BTC refuses to fall below the price levels of early September 2020. However, with parachain auctions coming, first for KSM and then for DOT - it appears DOT has the potential to see a positive breakout of the range. Since the auction of KSM will happen first, to judge whether DOT will see a positive breakout, KSM should have reference significance for whether DOT will see positive price action.
DOT/BTC
DOTSummary
In conclusion, DOT remains bullish in the medium term, however in the short term DOT looks relatively neutral (neither bullish nor bearish), the focus is not on DOT – but on ETH.
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