Rising Bitcoin Dominance Raises Expectations for a Falling Altcoin Market
The Bitcoin Dominance Index (BTCDOM) is in a clear uptrend, reflecting Bitcoin's growing dominance in the cryptocurrency market. According to data from Binance, BTCDOM is currently trading at $3,161.8, representing an increase of 42.96% over the past year and 9.77% over the past month.
BTCDOM Index chart shows steady rise in Bitcoin dominance / TradingView
BTCDOM Index Analysis
BTCDOM, a cryptocurrency price index from Binance, offers a key metric to measure Bitcoin's relative performance compared to the altcoin market. Not limited to a fixed range, this index is better suited for derivatives trading and provides insight into Bitcoin's relative strength.
Over the past year, the index has shown sustained bullish momentum, moving above the 25, 50, and 200 exponential moving averages (EMA) on the weekly chart. This upward alignment suggests a robust and healthy uptrend, with no immediate signs of reversal.
Declining trading volume
Despite the BTCDOM index's rise, trading volume is experiencing a significant decline. Since the bullish rally began on November 7, 2022, the 25-week average has decreased from 64,244 to 9,509 units. This reduction in demand could put the sustainability of the trend at risk if volume does not recover soon. It could also mean that BTCDOM could enter a consolidation phase.
Altcoin Market Context
As BTCDOM strengthens, many altcoins remain in downtrends and with reduced prices. Historically, a rise in BTCDOM coincided with a shift of investors towards alternative coins. However, the current trend reflects a stronger focus on bitcoin, to the detriment of altcoins.
The vast majority of alternative cryptocurrencies are located below 44.71 points, on Coinglass' RSI Heatmap tool, showing downward prices, against bitcoin.
The BTCDOM index continues to show a significant upward trend, despite the reduction in trading volume. This situation raises questions about the sustainability of Bitcoin's dominance in the cryptocurrency market.
Disclaimer: This information does not constitute financial advice. Readers should conduct their own research before making investment decisions.
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