Bitcoin (BTC) dominance broke out of a large falling wedge as the market pumped hard recently. Bitcoin (BTC) led the rally with the most gains rising more than 43% in less than 48 hours. This was unprecedented and manipulated to say the least but it is no use talking about that in the absence of regulation in this market. Let us talk about Bitcoin (BTC) dominance which has more room to rise further now that it has broken past the key 38.2% fib retracement level. It is likely to test this level as support once more and after that it could begin to rally again. In the past few days, Bitcoin Dominance (BTC.D) shot up because Bitcoin (BTC) outpaced other cryptocurrencies during period of an uptrend. However, in the days that follow, Bitcoin dominance (BTC.D) is expected to rally further for different reasons.
Historically, we have seen Bitcoin dominance (BTC.D) rise either when Bitcoin has outpaced the rest of the market or when the market has been declining and Bitcoin has held its ground better compared to other cryptocurrencies. In this case, we saw the former happen first as the recent pump was Bitcoin driven which is why BTC/USD made most of the gains. However, it was a desperate move on behalf of the market makers and whales and is indicative of what is likely to follow next. We have now seen BTC/USD run into the 61.8% fib retracement level from the all-time high. This is a strong resistance level and is unlikely to be breached any time soon. It will be a very long time before we see this shattered confidence restore. The market is now ready to decline to the next level and that is the 38.2% fib retracement level around $6,326.
The daily chart for BTC/USD shows that the price has not only faced rejection at the 61.8% fib retracement level from the all-time high but also the trend line support turned resistance. This is a bearish development and it indicates that we are now very close to the beginning of the next downtrend. RSI as well as the Stochastic RSI on the daily time frame point to the strong probability of such a decline in the near future.
We do not expect the price to begin a new cycle when it declines to the 38.2% fib retracement level. It is likely to decline much lower down to the December, 2018 lows and potentially much lower. In all fairness, considering the damage to confidence, it would not be unreasonable to expect it to decline even further potentially to a triple digit price. Bearish confidence has now been shattered to the maximum but the market makers and whales will now turn to the bulls who have recently become far too complacent. When their confidence is shattered as well, it would take a very long time for the market to recover and begin a new bullish cycle.