- Bitcoin’s dominance rate has hit 8-month highs, suggesting investor confidence in the recent price rally.
- A test of highs above $6,500 seen in November last year now seems likely.
- Such a move, however, may be preceded by a pullback to the 10-day moving average at $5,633 if the immediate resistance zone of $6,055–$6,100 remains intact in the next 24 hours or so.
- The short-term bullish outlook would be invalidated only by a drop below the 30-day MA at $5,365.
Bitcoin’s (BTC) recent rally looks sustainable, according to the charts, and the cryptocurrency’s rising dominance rate suggests investors are bullish.
The price of a single bitcoin jumped to $6,099 earlier today, the highest level since November 14, according to Bitstamp data.
Meanwhile, BTC’s dominance rate, which tracks its percentage of the total cryptocurrency market capitalization, has also jumped to 57.14 percent, the highest for eight months, according to CoinMarketCap.
A rising dominance rate essentially means the demand for bitcoin is greater than the demand for alternative cryptocurrencies (altcoins) and suggests that investors are buying bitcoins for the long haul and not merely to fund altcoin purchases (which often can’t be bought with fiat).
Bitcoin price/dominance rate comparison (2019)
Bitcoin’s near 50 percent price rally from its April 1 low near $4,000 is accompanied by a rise in the dominance rate from 50 percent to the current 57.14 percent.
That essentially means the alternative cryptocurrencies have partly decoupled from BTC as investors buy to hold.
This is evident from the fact that the BTC-denominated exchange rates of major altcoins like XRP, cardano (ADA), tron (TRX), dash (DASH), NEO (NEO), zcash (ZEC) and others have hit 2019 lows this week.
Had the dominance rate stayed put, the recent rally could have qualified as a speculative bubble, i.e. investors rotating money out of BTC and into cheap altcoins in a bid to make a quick profit.