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BTCD Struggles to Regain Footing After Sharp Drop

Analytics

beincrypto.com 04 December 2020 14:10, UTC
  
Reading time: ~3 m

The Bitcoin Dominance Rate (BTCD) has been struggling to gain a footing since it dropped sharply on Nov. 21-24.

The rate is likely to break down from its short-term pattern and move towards the support levels outlined below.

BTCD Gets Rejected and Falls

BTCD reached a high of 67.45% on Nov. 20 but dropped sharply immediately afterward.

The decline was swift and BTCD reached a low of 60.80% on Nov. 24. The low coincided with the 0.618 Fib retracement level of the entire upward move and left a long lower wick in its wake before BTCD moved upwards.

Despite the rally, BTCD has failed to move above the 0.5 – 0.618 Fib resistance area between 64 – 65%, which is a common level for corrections to end.

If BTCD fails to clear the resistance area and falls, the closest support area would be at 57%.

BTCD Chart By TradingView

BTCD Future Movement

Technical indicators support the possibility of a continued decline.

The RSI is below 50, the MACD is decreasing and has almost crossed below 0, and the Stochastic Oscillator is moving downwards after previously making a bearish cross.

BTCD Chart By TradingView

Cryptocurrency trader @Daancrypto outlined a BTC dominance chart, stating that whether the rate breaks out above 63% or falls below 61% will crucially determine the direction of the future trend.

Both areas coincide with those we have outlined. Due to the bearish readings from indicators, a breakdown seems the more likely option.

Source: Twitter

Once BTCD breaks down from the current symmetrical triangle, the rate of decline is likely to accelerate.

On the other hand, a breakout would cause another retest of the 0.5 – 0.618 Fib resistance before a possible drop.

BTCD Chart By TradingView

ETH/BTC

Since Ethereum (ETH) is the largest altcoin ranked by market capitalization, the movement of the ETH/BTC pair is a good predictor of BTCD movements.

ETH/BTC has been moving upwards since it reached a low of ฿0.026 on Nov. 18.

The price has retested the ฿0.0295 area as support and is moving upwards towards the next resistance at ฿0.033. A breakout would take ETH/BTC towards ฿0.04.

Technical indicators on the daily time-frame are bullish and support the possibility of this breakout, which would also fit with the projected decline for BTCD.

ETH/BTC Chart By TradingView

Conclusion

To conclude, BTCD is likely to fall from the current resistance area and eventually drop towards 57%.

On the other hand, the ETH/BTC pair could break out soon and move towards the next resistance area at ฿0.034.

Disclaimer: Cryptocurrency trading carries a high level of risk and may not be suitable for all investors. The views expressed in this article do not reflect those of BeInCrypto


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