The market appears to be under bullish influence since the beginning of the year due to the large rally. This could signal the bulls can take over the market and trigger a healthy rally for the rest of the year. However, some technical indicators suggest that the market may soon witness a turmoil that could shake up the entire market significantly.
Decreasing USDT dominance
The dominance of USDT signals the dominance of stablecoin Tether in the crypto market. The rise and fall of dominance has a major impact on the cryptocurrency space, and this suggests whether market participants are accumulating USDT or cryptocurrencies such as BTC or ETH. The dominance is decreasing, indicating a relative increase in the demand for cryptocurrencies.
- After maintaining a steep downward trend since October 2023, USDT’s dominance has declined and it has fallen below descending triangle support
- A retest below triangle support could validate the breakdown and flash a bearish signal, leading the level to near 4% from current levels around 5.65%.
- This could increase the likelihood of an extended bull phase as USDT’s dominance is inversely correlated with the crypto market.
Bitcoin’s dominance follows the trend
Bitcoin’s dominance will play a key role in determining the next course of action for BTC and other altcoins in the market. The rise in BTC dominance signals a liquidity flow in Bitcoin, which could cause the altcoin to trade sideways. Furthermore, the decline suggests that traders have shifted their focus to other altcoins.
- BTC's dominance appears to be in dire straits as the level fails to regain key resistance at 51.99%.
- The level has broken out of the rising wedge and reached near the 50.54% lower support, potentially paving the way for the altcoin to move higher.
- However, a successful retest above the temporary resistance level could prompt the BTC bulls to take action again and push the price towards new highs.
The chart above favors altcoins, as a decline in BTC's dominance indicates that altcoins will undergo large price movements. Some altcoins appear to have reached overbought levels due to a minor correction. However, this could be a short-term price movement, beyond which a new alt season could begin.
