Cryptocurrencies had a strong weekend in which Bitcoin (BTC) managed to breakout of its consolidation range and take out the $31,300 resistance level.
Bitcoin is up about +11% since last Friday’s close, with Ethereum (ETH) up about +15.7%. Although altcoin’s led by ETH have outperformed Bitcoin’s price action on a relative basis, there are further metrics that support the idea that Bitcoin is leading the current rally.
In fact, Bitcoin has been rapidly outperforming the rest of the crypto space on a relative basis since the May 9th LUNA/UST crash which is best visualized by looking at Bitcoin’s dominance of the overall crypto market cap…
Prior to the LUNA crash, Bitcoin was sitting at about 41.5% dominance of the overall crypto market cap. In the 20 or so days since the selloff, Bitcoin’s dominance has steadily increased to almost 47%.
Although we haven’t seen Bitcoin above a 50% market cap dominance in over a year (May 1, 2021), it looks likely that we’re going to see those levels again very soon. While BTC has been on a tear in regards to its relative outperformance of the altcoin market for the month of May, this isn’t exactly a new trend.
Actually, Bitcoin’s dominance has risen a full +16.58% YTD while the overal value of the crypto market has decreased by -42% YTD.
This trend is as clear of an indication as any that the interest for altcoins in 2022 has simply dissipated compared to last year. The days of a new meme coin leading the market up 1000% on its first day may be behind us, as the tried and true BTC looks to still be the most desired cryptocurrency in the world.
While things don’t look great for altcoins on a relative basis, Bitcoin maximalists are probably fairly satisfied with the last few days of price action. Right now we have 3 significant trends to keep in mind for BTC:
The rising trend line that starts from the 2022 low is the level that we want to see respected in order for an extended rally, which doesn’t seem all that unlikely given the similar slope of the July 2021 breakout also featured on the chart.
The two negative trends that are currently serving as key resistance levels for BTC originate from Bitcoin’s $69k all-time high and from the 2022 spike range high. A clear path to a major recovery is visible on the daily chart above, with the 50 and 200-day moving averages serving as your other key resistance levels to beat.
The last thing of note going into the first week of Q3 is that Bitcoin’s underlying momentum according to the RealMotion indicator continues to improve. This is evident by the Real Motion daily values crossing their 50-day averages before the same patterns occur in the price action. This is not a buy signal, but it’s often an early sign of a turn.
The trends on price as well as short and long-term momentum continue to improve, but are reaching slightly overbought levels on a short-term basis. This upwards trend after breaking out of the last 2-3 weeks of consolidations is of no real surprise to anyone thats been following our weekly reports or using the RealMotion indicator, as you’ve known for several weeks now that Bitcoin’s price looked likely to breakout!
Bitcoin is back in safe territory for the time being, and we’d love to see price action take out the technical levels we layed out above.
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