Bitcoin
Bitcoin Dominance Falls: Is It Time to Stock Up on Altcoins Like LINK Now?
- Bitcoin’s dominance and a technical indicator suggested it might be time for swing traders to look at altcoins.
- Relative strength against BTC is an important factor along with long-term support zones to evaluate underperforming altcoins.
Bitcoin [BTC] was trading within a range within a range. With a short-term downtrend, Bitcoin and the rest of the crypto market were not attractive to long-term investors.
The market may take a few weeks to consolidate, especially considering the huge gains in the months leading up to the halving. This could represent a buying opportunity for altcoins that have shown strength.
Examining BTC’s Recent Reset
Source: CriptoQuant
Coin Days Destroyed (CDD) is a metric that measures the age of coins moved during a transaction. It is calculated by multiplying the number of coins in a transaction by the number of days the coin has not been moved.
Hence, a large increase in CDD implies that long-dormant Bitcoin has been moved. Long-term holders may choose to book profits during a rally (as happened on March 23) or after a particularly deep pullback (April 1).
While it’s not a crystal ball, it’s a useful metric for gauging HODLer sentiment.
Source: BTC.D on TradingView
The Bitcoin Dominance chart measures the market capitalization of BTC as a percentage of the total crypto market capitalization. It stood at 54.68% at press time and fell below the previous support level.
This zone, highlighted in red, is expected to serve as resistance. Therefore, if BTC dominance resumes its downtrend, it could give altcoins a chance to make gains.
Which altcoin could you focus on?
On a recent post at X, crypto analyst Ali Martinez noted that the TD sequential indicator issued a buy signal for Chain link [LINK] on the 12-hour chart. However, LINK has lost close to 33% since March 26th.
In the same period, Bitcoin lost 12.2%. A sign of an altcoin’s strength is when it resists BTC’s losses reasonably well. LINK has not shown strength against Bitcoin over the past month.
Source: Hyblock
The settlement heatmap showed that $16, $18, and $19.5 were the regions with the highest concentration of northern settlement levels. This marked them as bullish targets. However, the downtrend was still in play.
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Liquidity at $13.5 and $12.5 was much closer and more likely for LINK prices to reach in the coming weeks.
Therefore, although BTC Dominance and sequential TD have given swing traders a reason to go long, the potential for a drop to these support levels should be kept in mind before entering trading positions.