One of the informative charts to see the power of bitcoin against the rest of the alts on a specific day, is the bitcoin dominance chart, also available on tradingview.com. This chart shows the market cap of bitcoin compared to the overall total of all cryptocurrency combined.
As we can see in the chart today, bitcoin is up at 66.6% or two thirds of all crypto traded at present. It has been climbing again, since it dipped in late November. That dip was only over 3 days though, as seen by the massive red candles. Gradually over the past almost 30 days the bitcoin dominance of total market cap has been climbing back up. Now it is approaching the previous highs around 67%.
In other words not only is bitcoin by far the most dominant cryptocurrency traded, but more and more money is flowing into bitcoin this month, pushing the dominance still higher. This is natural during a price pump of bitcoin.
Now if we look at the overall daily chart for the bitcoin dominance, we can see that it looks a little bit like a “cup and handle” pattern, which is bullish and suggests further upside for the bitcoin dominance. I’m not sure if we can actually use technical analysis or chart patterns on this particular chart, but perhaps it may well show us the future, to a degree. I’m merely exploring the possibilities and may be reading too much into it, so this is not investment advice or anything other than my own curiosity.
If the bitcoin dominance rises above the previous high of 67.42, then we have to accept that more and more money is leaving the alts and going into bitcoin. Add to this the fact that on this daily chart, the 100 MA has crossed up above the 200 MA in a very bullish pattern. Perhaps we could call it a golden cross.
Obviously now as bitcoin pumps massively, the market cap will grow just as rapidly, leaving the rest of the crypto assets in its dust. The previous high back in September 2017, is up at 73% dominance. So we have some more room for bitcoin to climb in market cap dominance. This will obviously imply that alts are simply not attracting much investment or trade by comparison.
Now is the time for bitcoin to grow. If at some point we want to know when altcoin season may arrive, then we just need to look at this chart and watch for the retrace of the bitcoin dominance from its current highs. If bitcoin pauses now at its high and consolidates, then alts may well be a good investment against BTC.
But for now, we will have to wait. If bitcoin has a sudden retrace to the downside, it may also drag alts down with it, so we need a pause and consolidation in the price of bitcoin so that the alts can catch up. This particular bitcoin dominance chart is a good gauge of where investment money is going. Let’s observe and let the charts show us the way.
