Bitcoin takes the lead, dominance increases as BTC surpasses altcoins
A growing narrative among crypto and traditional asset class investors that Bitcoin may indeed be a viable safe haven against potential turmoil in the traditional fiat-based fractional reserve banking system has helped propel BTC to new multi-month highs compared to its major altcoin peers – colleagues this week. .
According to TradingView, Bitcoin dominance (ie the percentage of the cryptocurrency market’s total capitalization taken up by Bitcoin) reached its highest level in nine months above 45.5% on Wednesday. It comes after the BTC/ETH exchange rate hit its highest level since November around 15 earlier this week.
BTC/BNB, meanwhile, is near its highest since last August around 80, BTC/XRP is at its best level since last September above 62,200, while BTC/ADA is at its lowest since early 2021. Blockchaincenter.nets The Altcoin Season Index has thus fallen firmly back into “Bitcoin season” (defined as points below 25, with the current score at 22), down from late February peaks in the 47 range.
Can Bitcoin Reach $30,000?
Bitcoin’s leap into dominance comes after the cryptocurrency hit its highest levels since June in the mid-$26,000s earlier this week, a stunning rebound from last week’s plunge to fresh two-month lows below the $20,000 level. Last week’s decline was triggered by broader risk flows after a wave of crypto/tech-friendly US banks went under.
This week’s rally was triggered by a combination of bullish factors, analysts believe, including 1) a proactive response by the US government to freeze deposits and 2) launch a new bank liquidity program (which helped the USDC, a key part of the crypto market’s plumbing, return to its $1 peg), and 3) expectations that the risk of a banking crisis will deter the Fed from engaging in significant further interest rate increases.
The aforementioned narrative around Bitcoin being a safe haven from trouble in the traditional financial system is also touted to have helped, just as it is being touted as boosting Bitcoin versus its major crypto rivals. Whatever the reason for the decline, analysts’ price predictions have become significantly more bullish.
Technical signals look good; Bitcoin rebounded strongly from the recent retest of the 200DMA and realized price (both just below $20,000), a sign that the bull market is robust, and the recent breakout above the $25,200-400 area resistance is seen as opening the door to a run higher towards the next resistance area in the $28,000 area.
On-chain indicators that can signal when a bear market is over continue to send good signals, as discussed in this recent article. Metrics related to Bitcoin’s on-chain activity (such as daily transactions, creation of new addresses, daily active users, number of addresses with a non-zero balance) generally also continue to trend positively.
Traders will continue to monitor the health of the US and global financial system, with any signs of further cracks potentially adding further fuel to Bitcoin’s rally. Next week’s Fed meeting will be another key event to watch, with this week’s US CPI and PPI (luckily for the Fed) giving them some room to signal a slightly less aggressive tightening outlook. There could be another tailwind for Bitcoin.
If Bitcoin can get to and break above the $28,000 resistance, the door will be opened for more upside beyond $30,000 to the next major resistance around the $32,500-$33,000 area.
