Over the weekend, altcoins began to pull back after an enormous market-wide rally, starting with Ethereum. And while the market looked to be turning bearish, news of a massive Bitcoin buy made by auto manufacturer Tesla set the crypto market on fire.
On Bitcoin pairs, altcoins began to hemorrhage across the board. But according to a certain technical indicator and BTC dominance, the price action could be nothing more than a short-lived shakeout before the full alt season begins.
Tesla Buys Bitcoin, Crypto Fever Boils Over
As if the magma-hot crypto market needed another reason for coins to be trending, an SEC-filing revealed that Tesla had purchased $1.5 billion worth of BTC.
The buy itself was made some time prior, but news of it caused a wave of FOMO and prices began to rocket. Exchanges like Binance went down due to the sheer demand of investors looking to buy Bitcoin.
Related Reading | Altcoin Season Is Here: “Buy Crypto” Surpases Bitcoin Searches On Google
Not only are they looking to buy more BTC in hopes of capitalizing of further upside, but given the nod of support from the likes of Elon Musk, crypto investors have even been dumping altcoins in exchange for more Bitcoin.
But according to the Ichimoku Kinko Hyo technical indicator and BTC dominance, looks can be deceiving.
News Leaves Altcoins Battered, But BTC Dominance Suggests It’s A Shakeout
BTC dominance is a metric that weighs the giant market share Bitcoin commands against the rest of the space. The top cryptocurrency has long enjoyed two-thirds or more dominance, but is at risk of losing it for good.
After another attempt to set new highs in dominance, BTC simmered down and fell back to under 63% as Ethereum broke its former record, and other alts soared.
BTC.D is being rejected by the Ichimoku cloud on weekly timeframes | Source: CRYPTOCAP-BTC.D on TradingView.com
And while it seems as though dominance is ready to reverse once again, the Ichimoku suggests this is bearish retest in progress. In the chart above, the green candle is back trying to break into the cloud on weekly timeframes. Three failed weeks have left wicks into the cloud, but further upside in dominance hasn’t materialized.
Related Reading | Altcoin Market Cap On The Verge Of Life-Changing Breakout
After repeated rejections, the most likely scenario is down for BTC dominance. And if this happens, the recent altcoin rallies were barely the start of what’s to come for upside.
On higher, monthly timeframes, the story told is similar. A massive green candle was entirely engulfed by bears, meaning altcoins have finally turned the corner against Bitcoin.
Even more bearish signals exist on monthly timeframes | Source: CRYPTOCAP-BTC.D on TradingView.com
Price action on monthly BTC.D charts show that a red candle is barely hanging onto the baseline on the Ichimoku also. A close below it, suggests further downside.
A plummet deep below 63% is likely if the support turned resistance continues to reject BTC.D. Could the greatest alt season on record be just days away? Adding more credence to the theory, recently, Google searches for “buy crypto” began to outpace “buy Bitcoin” for the first time.
Featured image from Deposit Photos, Charts from TradingView.com