Bitcoin analysis: is it wise to be in altcoins right now? – BLOX

 Bitcoin analysis: is it wise to be in altcoins right now?  - BLOX

Now that the Bitcoin price has hovered around the same level for a few days, it is time to analyze factors other than the price. In this analysis we will look at the Bitcoin dominance. This factor can tell us what percentage of the market is Bitcoin. From this we can also see how altcoins are doing.

First the course

To start with, we quickly take a look at the price, to get a sense of where Bitcoin is at. In the image below we see the weekly chart of the crypto king, where each candle represents 7 days. We immediately see three levels that have been very important in the price development.

We see that Bitcoin has now lost the middle zone as support, which usually indicates a further decline. But this can also turn out differently, as described in the previous analysis. December 1 can still make a big difference and cause an upward movement for Bitcoin, as you can read in that analysis.

The dominance

Now that we know that the price is not necessarily in good shape, let’s look at Bitcoin dominance: the percentage of the market that consists of Bitcoin. The rest of the percentage consists of alt and stablecoins.

Dominance has been floating between two important levels since 2021. Bitcoin has since made up a minimum of 39% of the market (lower blue zone), and a maximum of 49% (upper blue zone). The Bitcoin rate has so far reversed every time it reached these levels, so it is plausible to think that this will happen again. In combination with the Bitcoin price, this can mean 4 different things, which are described below.

What can you read through dominance?

These scenarios are described in the four headings below.

Dominance up, rate up

If the dominance grows and also the price, the rest of the market (alt and stablecoins) will not move much. At such times it is good to be in bitcoin, because the price is doing very well.

Dominance up, price down

Should dominance grow and Bitcoin fall, it means a lot of money is being pulled out of the market. If Bitcoin’s share of the market shrinks and so does the price, then that’s the only logical conclusion. It is better to stand on the sidelines in such cases, especially if you are in altcoins. This seems like the most likely scenario at this point, but it’s not a guarantee.

Dominance down, rate up

With a declining dominance and a rising Bitcoin price, it is a different story. In that case, it means that Bitcoin is doing less well and there are more people in alt or stablecoins. Altcoins are a good investment compared to Bitcoin at such times, provided there is not a lot of money in stablecoins.

Dominance down, price down

Then we come to the last scenario: a declining dominance and a declining Bitcoin price. In this exceptional case, it is not exactly possible to gauge the market. It could be that Bitcoin is just falling when not much is happening in the market.

It is important to mention that the percentage of the market that consists of stablecoins also influences this. In this case, if there is a lot in stablecoins and little in altcoins, many people want to be on the sidelines, both Bitcoiners and altcoin holders. If there are few stablecoins in the percentage, altcoins are much better than Bitcoin (a very exceptional scenario). For now, Bitcoin looks very uncertain. So keep an eye on the prices.