Bitcoin’s Dominance Rate (BTCD) is moving below a long-term support zone, which could lead it to a new all-time low.
On May 19, the BTCD fell to a low of 39.66% before rebounding. First of all, it looked like the rate was going to start to move up. That said, it eventually generated two lower highs and is now at its May low.
This decline validated the 38% area as support. The BTCD has been moving above this area since the start of 2018. If the rate drops below this level, it could cause a drop to a new record low.
Technical indicators are bearish, supporting the possibility of Bitcoin’s dominance rate falling below its support.
The MACD, which is created by a short and long term moving average (MA), is negative. This means that the short-term MA is slower than the long-term one, which is a sign of a downtrend. In addition, the histogram loses its strength and is falling (red arrow).
The RSI, which is an indicator of momentum, is also bearish. While it previously generated a bullish divergence (green line), it has moved below its trendline and is now down. In addition, it is below 50.
Thus, a drop in Bitcoin’s domination rate below the 38% zone seems likely.
The crypto-trader @AltcoinSherpa shared a chart from the BTCD, which shows the rate has fallen 46% from its annual highs. As indicated above, it looks like its downward movement will continue.
The current decline in the rate
The daily chart shows a similar outlook, with the BTCD declining along a descending resistance line since October 20.
While the MACD and RSI initially generated bullish divergences, the RSI fell below the trendline, while the MACD completely canceled out its divergence.
Thus, the passage of the BTCD under its support and the continuation of the bearish movement towards a new historic low seem likely.
Next movement of the BTCD
The entire decline since the start of the year looks like a five-wave descending move, of which BTC is currently reportedly in the fifth and final wave.
A potential target for the bottom of the whole movement is found at 27%. This is achieved by using the external 2.61 Fibonacci retracement (blank) of the fourth wave. Additionally, the 0.618 length of waves 1-3 (in black), which provides an almost identical focus, adds additional confluence at this level.
Then we would expect the BTCD to move higher.
Disclaimer
All information on our website is published in good faith and for general information purposes only. Any action taken by the reader based on the information found on our website is entirely at their own risk.