The Altcoin Market Capitalization Indicator (ALTCAP) is trading near the long-term downtrend resistance line, a breakdown of which could trigger an impulsive bullish market move.
Altcoin market capitalization
Cryptocurrency trader @Crypto_Ed_NL suggested that the altcoin market capitalization indicator (ALTCAP) will soon explode. In support of this theory, he shared the following graph with readers:
Until now, this figure has rallied four times. This happened in the following periods:
- July 2014
- February 2016
- March 2017
- February 2018
All these four times, the aggressive rally began after ALTCAP made a bullish breakout of the downward resistance line built from the previous high.
Today, prior to writing the analysis, ALTCAP was trading directly in the area of ??the downtrend resistance line starting in December 2017 and the 38% resistance area. Until we see a pure bullish breakout of both of these levels, we cannot be confident about the start of a bullish altcoin season.
In July 2019, the weekly RSI hit an all-time low, and ALTCAP has been on the rise since then. Although we do not see bullish divergence signals on the chart, such extreme RSI values ??are often a sign of a trend reversal.
Bitcoin dominance index
Since the Bitcoin Dominance Index (BTCD) is the opposite of altcoins, it makes sense to look at its dynamics as well. Cryptocurrency trader @Incomesharks shared a chart of the BTC Dominance Index on Twitter, saying he expects another decline towards the 62% area, allowing altcoins to spread their wings.
The Bitcoin Dominance Index has been declining since May, moving along the line of downward resistance. In addition, the BTCD is likely trading within a falling wedge pattern known as a bullish reversal pattern.
Also, the index has formed a long lower wick on the chart directly in the support area, and the daily RSI is giving strong signals of bullish divergence. All this promises the market growth, at least in the direction of the resistance line of this wedge.
The trend is clearly downtrend and BTCD is consistently making lower highs and lows. However, the long-term direction of the trend will remain uncertain until we see either a bullish breakout of the downtrend resistance line or a bearish breakout of the support area.
