Bitcoin (BTC) dominance has reached has reached 61%. This is something we have not seen in a long time. The market is frustrated that Bitcoin (BTC) keeps on shooting up while altcoins like Ethereum (ETH) lag behind. If we look at the weekly chart for ETH/USD, we can see why it has been lagging behind. The price is trading in a large ascending triangle as well as a horizontal resistance around $340. The price is very likely to start falling from here and if it ends up breaking below the ascending wedge, we will see it decline to the bottom of the ascending channel which also forms a part of a large bear pennant. So, what does all of this mean? It means that Ethereum (ETH) and other altcoins are at risk of extreme capital flight not only short term but long term as well.
There are some people that buy the narrative that Bitcoin (BTC) might serve as digital gold during a financial crisis. However, the same is not true of altcoins. Nobody wants to be holding coins like Ethereum (ETH) during a financial crisis. So, we have strong reasons to believe that when things start to heat up on the political and economic scene in the months ahead, we are going to see people get out of these coins a lot faster than they do out of Bitcoin (BTC). Some people might still believe that Bitcoin (BTC) could be digital gold so they will hang on to it until they lose a significant percentage of their portfolio but nobody expects Ethereum (ETH) to be a safe haven asset. So, ETH/USD might fall a lot harder and even end up forming new yearly lows against Bitcoin (BTC) as well as the US Dollar (USD).
We expect Ethereum (ETH) to form new yearly lows against Bitcoin (BTC) and the US Dollar (USD) but that does not mean that we expect the bear market to come to completion this year. If we look at the weekly chart for ETH/BTC, we can see that the price is trading in a large descending triangle. These triangles break to the downside almost always even in the cryptocurrency market. This time we have reasons to believe why that will happen and that is a flight of capital from these coins into Bitcoin (BTC) and eventually into fiat as the downtrend begins.
The big picture is beginning to get very obvious which means the market makers might attempt to confuse traders both to the upside and the downside before the inevitable comes into play. The altcoin market in particular is due for a brutal bloodbath as the next downtrend begins. The US Dollar is unlikely to lose its strength anytime while President Trump is in office. Meanwhile, ECB wants a weak Euro. All of these are devastating developments for cryptocurrencies in general and altcoins in particular which is why investors should exercise extreme caution getting into altcoins at this point despite short term pumps and dumps.