The Bitcoin dominance rate (BTCD) has failed to sustain its upward movement and could head towards its January 2018 lows
BTCD has fallen sharply since January 2021, when it just hit a high of 73.63%. Since early May, it has been hovering just above the 40% horizontal support zone, in place since 2018.
While the are has been the catalyst for two bounces, the second was weaker than the first, which is a sign of weakness.
In another bearish development, last week’s close (red icon) was the lowest since 2018.
Technical indicators are providing mixed signs. While there is a considerable bullish divergence developing in both the RSI and MACD (green line), both indicators are still in negative territory.
Therefore, the weekly timeframe does not provide consensus on the direction of the trend, but relies on a downtrend.
Cryptocurrency trader @Mesawine1 tweeted a BTCD chart, stating that the token is likely to increase towards a new all-time low.
Due to the ambiguity of the weekly timeframe, a look at the daily timeframe is necessary to determine the direction of the trend.
Future BTCD movement
The daily time-frame suggests that it is more likely for BTCD to continue decreasing than it is for it to bounce.
The first reason for this is that it looks like BTCD is already out of the 40% zone. It now appears to be validating it as a resistor (red icon). This is a bearish trend that often leads to the continuation of the bearish movement.
Secondly, the MACD has created three consecutive lower momentum bars and has nearly crossed into negative territory. Furthermore, the RSI has fallen below the 50 line after deviating above it (red circle). These are all signs that a downward movement would be the most likely scenario.
Given that BTCD is rising in the short-term, the most likely scenario would have it rally towards the resistance levels at the 0.5-0.618 Fib retracement at 40.2-40.4% before a further decline towards the all-time low region at 35.5%
