Key takeaways
- BTC has been trading around $111k and could stabilize soon to allow altcoins to rally.
- The Bitcoin dominance level has dropped to 55 amid growing altcoin demand.
BTC stagnates at $111k as altcoin demand grows
Bitcoin, the leading cryptocurrency by market cap, has been trading around $111k over the past two days. This performance comes despite altcoins rallying higher, with Ether now approaching $4,500 after adding over 1% to its value.
However, Bitcoin’s stagnation comes with a decline in its dominance level. Bitcoin dominance has declined from its 62% peak to 55%, an indication that investors could be shifting funds from Bitcoin to altcoins.
Bitcoin dominance measures Bitcoin’s market capitalization as a percentage of the total cryptocurrency market cap. This metric helps investors determine if Bitcoin is favored at a particular period or if altcoins are the preferred investments.
In an email to Coinjournal, Sergei Gorev, Head of Risk, YouHodler, stated that historically, the dynamics of the BTC price have usually caught up with the dynamics of M2 growth. Gorev added that,
Perhaps this divergence is caused by the local summer vacation period, and, with the beginning of the autumn business season, the price of BTC may straighten again. In our opinion, the strengthening of the position of second-tier coins is quite long-term. Firstly, this is due to the market redistribution of profits of early investors in BTC, and secondly, in the future, the creation of crypto reserves may occur in the most liquid crypto projects, which can attract a wide range of corporate investors willing to invest billions of dollars. We think the next interesting market ideas could be SOL and XRP.
BTC still targets $113k despite declining dominance level
The BTC/USD 4-hour chart has seen an improvement compared to the bearish price action in August. The technical indicators have started switching positive, with the RSI of 59 showing that sellers are no longer in control.
If the recovery continues, BTC could look to overcome the 4-hour resistance level and TLQ at $113,487. A breakout above this level would enable BTC to reclaim the $117k resistance with ease.
However, with the market still jittery, BTC could face a downward correction and drop to the Monday low of $107,250.