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What Is The Bitcoin Dominance Chart Showing?

What Is The Bitcoin Dominance Chart Showing?

Crypto Technical Analysis

11 Oct 2021

Current BTC dominance state

The Bitcoin Dominance Index chart is currently at a crucial stage. Similarities are being drawn between the current Bitcoin dominance pattern and a similar chart formation observed in 2018. Currently, the Bitcoin dominance chart is illustrating a potential multi-month double bottom / W formation, as shown below.

Current BTC.D Index chart

Historical BTC Dominance chartwork

On the current chart, support has been found at the 40% BTC dominance level. BTC is currently at its second-lowest dominance percentage in history. Only once before has Bitcoin dominance dipped so low, and that was in 2018.

BTC Dominance over time

At the end of the 2018 bull run, Bitcoin created a double bottom / W formation, highly similar to its current chart action.

BTC double bottom formation in 2018

Currently, many traders are seeing the same formation recurrence. However, there are still numerous differences between Bitcoin’s current formation and the one witnessed in 2018. The main difference is the macro on-chain indicator status. At the lowest BTC dominance level, the Puell Multiple and RHODL Ratio were both displaying sell signals. Additionally, traditional indicators such as the RSI were showing an ‘extremely overbought’ status on higher time frame charts, since BTC’s growth was near vertical.

However, this time around, BTC is not overbought on long-term indicators. In fact,on-chain indicators suggest that the Bitcoin bull run is far from over. Our analysis today also comes to the following conclusion.

Scenario one: BTC could see astronomical growth

In the chart below, BTC can be seen breaking above the crucial 50% resistance level. This will lead to the completion of the potential double bottom formation BTC is witnessing. With numerous altcoin charts looking bullish and the BTC bull run appearing far from over, BTC could see astronomical growth in the near future.

If this scenario occurred, BTC could see its value increase to six figures in Q2 2022.

BTC.D potential chart

Scenario two: BTC cannot break above 50% resistance, altcoins explode

Recently, Bitcoin created an ascending wedge formation and witnessed a 100% retracement to an ascending wedge point of origin. The ascending wedge point (D) is a major resistance zone. This point is a historical resistance threshold and is the 0.5 Fibonacci level -from point (E) to the origin point.

Altcoin traders will be hoping that BTC maintains its current bullish momentum. However, they will be looking for BTC to reject this dominance level, pushing down towards the -0.236 (A) - (E) Fibonacci level, as shown below.

BTC.D potential chart


The cryptocurrency market is currently bullish. Unlike 2018, when BTC increased its dominance due to altcoins devaluing faster than BTC, Bitcoin is looking to increase at a faster rate than altcoins. Whether focus should be on BTC or altcoins will depend on the cryptocurrencies’ performance at the crucial 50% level. If Bitcoin dominance breaks above 50%, it is likely that BTC will hit $75,000 USD by the end of 2021. Bitcoin dominance charts are therefore certainly something to keep your eyes on in the coming weeks.

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