Bitcoin Dominance, ETH/BTC, Altcoin Market Cap – Three Key Charts Point to Start of Altseason

Key Takeaways

• The Bitcoin Dominance Rate (BTCD) has broken down from a long-term support level.
• Ethereum reclaimed a long-term support level against Bitcoin and attempted a breakout.
• The Altcoin Market Cap attempts to break out from a long-term parallel channel.

Bullish crypto market cycles in 2017 and 2021 had periods in which altcoins greatly outperformed Bitcoin, known as altseason. This has not been the case so far in 2024. While there are individual altcoins that have posted more gains than Bitcoin, the latter has increased at a faster rate when compared with the altcoin market as a whole.

This could change soon if the chart readings for the Bitcoin Dominance Rate, Ethereum/Bitcoin, and the Altcoin Market Cap prove to be reliable indicators. Will this altseason happen in 2024, and if so, what will be the catalyst that causes it?

Bitcoin Dominance Rate Holds Despite Breakdown

The BTCD increased alongside an ascending support trend line since November 2022. The upward movement culminated with a high of 57% in April 2024, coinciding with the 0.5 Fibonacci retracement resistance level. BTCD has fallen since and broke down from the trend line in July. At the time, the trend line had existed for 581 days.

While a breakdown from such a long-term structure often causes a significant decline, this was not the case for BTCD. Rather, its price is at a similar level as before the breakdown. On the other hand, BTCD increased slightly last week and is back above 55%.

If it were to reclaim the ascending support trend line, BTCD would invalidate the breakdown and could trigger an increase to the next resistance at 60.61%.

However, technical indicators suggest this will not be the case. Rather, they convey weakness that supports the price breakdown. The weekly MACD has generated a bearish divergence for over a year, and the RSI has done the same for nine months. Such lengthy divergences are signs that often coincide with market cycle tops.

So, despite the lack of a downward trend once BTCD broke down from the trend line, the most likely future outlook is still a decline toward the next closest support at 47.50%.

If this happens, an altseason is expected, possibly led by Ethereum.

Will Ethereum Finally Break Out?

The Ethereum/Bitcoin chart is almost the mirror image of the BTCD one. This is to be expected since Ethereum is the largest altcoin, and its movement greatly affects BTCD. However, the main difference is that ETH has yet to break out from its descending resistance trend line which has existed for 679 days.

The Ethereum price made seven unsuccessful breakout attempts (red icons). Since four of those happened in the last four months, the resistance is weakening and the price will likely break the trend line soon. These attempts happened after the Ethereum  price reclaimed the long-term horizontal support at ₿0.052.

Similarly to BTCD, the weekly RSI and MACD both generated notable bullish divergences. Combined with the reclaim of the long-term support and the bearish BTCD chart, this supports a price breakout, ending the two-year correction.

Additionally, Ethereum’s ETF is likely to go live on Tuesday, July 23, which could further boost the price of ETH, especially if it has a similar effect to Bitcoin’s ETF.

What About the Rest of the Altcoin Market?

Since we have looked at the Bitcoin Dominance Rate and Ethereum’s movement against Bitcoin, the next important chart for determining the likelihood of an alteason is the altcoin market cap, which is the total market cap excluding Bitcoin and Ethereum. Its movement aligns with the previous readings and suggests that the altcoin market cap will break out, confirming the beginning of altseason.

The altcoin market cap has fallen since March 2024, a decline that led to a low of $509 billion on July 5. The altcoin market cap has increased since and is currently in the upper portion of the channel. So, a breakout is likely.

The daily MACD and RSI both support this scenario. The MACD generated a bullish divergence (green) and is in positive territory. While the RSI did not generate a bullish divergence, it is increasing and above 50.

As a result, a breakout for the altcoin market cap is likely, aligning with an ETH/BTC breakout and BTCD breakdown. This could finally mark the beginning of altseason.

Rest of the Year Likely to Be Bullish for Altcoins

The bearish readings for the BTCD combined with the bullish ones for ETH/BTC and the altcoin market cap all align. They suggest that altcoins are expected to outperform Bitcoin in the coming months, possibly led by Ethereum. An ETH/BTC breakout will confirm this, marking the end of a two-year correction.