Bitcoin (BTCD) dominance rate has failed to sustain its upward movement and may decline towards its January 2018 low.
BTCD has been in steep decline since January 2021, just after peaking at 73.63%. Since the beginning of May, it has been moving just above the 40% horizontal support zone, which has been in place since 2018.
Although the zone was the catalyst for two rebounds, the second turned out to be weaker than the first, which is a sign of weakening.
Last week’s close (red arrow) is also the lowest since 2018, which is another bearish development.
Technical indicators are showing mixed signals. Although considerable bearish divergence is developing in the RSI and MACD (green line), both indicators are still in negative territory.
Thus, the weekly data does not provide consensus for the direction of the trend, but leans lower.
The crypto trader @Mesawine1 tweeted a chart of BTCD and claims that the token will likely decline towards a new all-time low.
Due to the ambiguity of the weekly data, it is necessary to look at the daily chart to determine the direction of the trend.
BTCD’s next move
The daily chart for December 17 suggests that Bitcoin’s dominance rate is likely to continue to decline rather than rebound.
The first reason behind this assumption is that it looks like BTCD has already fallen below the 40% area and is now on its way to validating it as resistance (red arrow). This is a bearish development that often leads to a continuation of the decline movement.
Then, the MACD created three consecutive lower momentum bars and is practically in negative territory. Additionally, the RSI has broken below the 50 line after deviating above it (red circle). These are all signs indicating that a downward movement would be the most plausible scenario.
Knowing that the BTCD is increasing in the short term, the most plausible scenario would be that it rises towards the resistance of the Fibonacci retracement of 0.5 to 0.618, located at 40.2% – 40.4%, this before a further decline towards the region from its record low at 35.5%.
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