Bitcoin’s Price Sees Renewed Upside Near $8,100 as Dominance Rate Falls
Bitcoin’s price swung higher on Wednesday in a session marked by narrow trading ranges, as the battle between the bulls and the bears raged on near the critical $8,000 level. In the process, bitcoin’s dominance rate fell slightly, a sign that altcoins and tokens were starting to mobilize their next move higher.
The bitcoin price notched a session high of $8,089.51 on Bitstamp, its best intraday level since June 7. At the time of writing, the BTC/USD exchange rate was up 1.2% at $8,010.
Over the past 24 hours, bitcoin’s price has gained 2.7%, according to aggregate data provider CoinMarketCap.
Bitcoin swung sharply lower earlier this week, briefly penetrating the 30-day exponential moving average (EMA) for the first time since the uptrend began many months ago. However, the 30-day EMA continues to provide solid support, as evidenced by the immediate recovery.
Long-term holders are still dominating the market, according to the accumulation/distribution (A/D) line. The volume based indicator clearly shows strong underlying demand as investors continue to buy and hold bitcoin. About 60% of all bitcoin in circulation has not moved in at least a year. That number is equivalent to 10.5 million BTC being held as a store of value. Read more here.
Bitcoin’s trading range has narrowed significantly over the past week, a sign of momentary consolidation between major cycles. Bitcoin’s upward trajectory raged on for the better part of four months, resulting in some of the biggest price gains since the bull market.
Bitcoin Dominance Rate Falls
Despite returning above $8,000 on Wednesday, bitcoin’s dominance rate gradually declined as altcoins and tokens eyed even bigger recoveries. At the time of writing early Wednesday, bitcoin’s dominance rate had fallen to 55.3%, according to CoinMarketCap.
Since peaking around 60.5% in mid-May, bitcoin’s dominance rate has fallen more than five percentage points.
As a standalone indicator, bitcoin’s dominance rate doesn’t provide much information about the cryptocurrency’s trend. After all, bitcoin’s market cap fell below 50% during the height of crypto euphoria back in December 2017. It would eventually bottom around 34% in January 2018 during the height of altcoin season.
That being said, a sliding dominance rate could signal that more traders are using BTC as a quote currency to buy more altcoins. Capital flows from bitcoin to altcoins and vice versa are not uncommon during bull cycles. The opposite seems to be true during bear markets, where investors rely more on bitcoin as a store of value. Case in point: bitcoin’s dominance rate rose significantly last summer as the leading digital currency held onto the $6,000 range while altcoins and tokens suffered.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock. Charts via TradingView.