Bitcoin (BTC) is quickly regaining its lost dominance in the cryptocurrency market so far in 2023.
On January 30, Bitcoin accounted for 44.82% of the total crypto market capitalization, the highest since June 2022. In September 2022, the Bitcoin dominance index was as low as 38.84%.
The index typically rises when most crypto investors reduce their exposure to smaller tokens and seek safety in Bitcoin. Reasons include Bitcoin’s better liquidity and lower volatility than alternative cryptocurrencies, or altcoins, mainly in a bear market.
Will Bitcoin’s market dominance continue to grow?
As of January 31, Bitcoin is up 38% year-to-date, sitting at around $23,000. By comparison, heThe second largest cryptocurrency, Ether (ETH), gained 30% in the same period, showing that most investors are still gravitating towards Bitcoin so far in 2023.
From a technical perspective, the Bitcoin Dominance Index may rally higher in the coming weeks as it reclaims its 50-week exponential moving average (the red wave on the chart below) for support.
If it does, the index could rise towards 48.5%, which has acted as resistance since May 2021.
Secondly, the independent market analyst Rekt Capital go that the Bitcoin dominance index increases towards 46%, which coincides with the upper trend line of a giant descending channel pattern, as shown in the monthly time frame chart below.
The short-term bullish scenario on the Bitcoin Dominance Index chart appears to be in line with a similar rally in the Bitcoin spot market, with bulls eyeing a push towards $25,000.
The strength of #bitcoin on the 4-hour charts continues to be impressive.
While price action has trended sideways for over a week, short term indicators (MACD, RSI) have once again reset… and are now ramping higher.
A price rises to ~$25k is likely.
(Not investment advice) pic.twitter.com/QaPbNrxtxZ
—Dr Jeff Ross (@VailshireCap) January 29, 2023
Bitcoin’s strength on the 4-hour charts remains impressive.
While the price action has been trending sideways for over a week, the short-term indicators (MACD, RSI) have reset once again…and are now rising.
It is likely that the price will rise to ~USD 25,000.
(Not investment advice)
Ethereum vs. Bitcoin, the main driver of BTC dominance
The bearish argument is that the Bitcoin Dominance Index may start to lose its bullish momentum after testing the resistance of its descending channel, as it had on several occasions in the recent past.
“Bitcoin dominance is extending beyond the red in the monthly TF”, notes Rekt Capital while citing the index’s horizontal trend line support near 44.11%. The analyst adds:
“A monthly close above red could send BTCDOM back into the red, which would benefit altcoins.”
The above analysis comes as ETH eyes a possible bullish reversal against Bitcoin in the coming weeks.
In particular, The ETH/BTC pair has been consolidating near its support area (purple) within the 0.0676-0.0655 BTC range since Jan 24.
The ETH/BTC pair is likely to rally towards its downtrend line resistance (in black) around 0.075 BTC if it continues to hold the support zone. That, in turn, would reduce Bitcoin’s “dominance” in the cryptocurrency market, as Ethereum’s share would increase towards 20%.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.