It’s all about Bitcoin (BTC) in recent months with altcoins as a result and BTC’s dominance hit a new local high of 67.5% in recent days.
However, a reversal usually happens once altcoins start to show such great weakness and altcoin traders are in a depression. The leading indicator for such a U-turn is Ether (ETH), which is now in a do or die position relative to its BTC pair.
New higher high for ETH in first uptrend since bear market
The chart above is self-explanatory and shows a fresh upward trend since the over $ 300 breakout earlier this year when buyers immediately stepped into this region. This was a breakthrough from a multi-year accumulation range, increasing the chances of a continuation of the bull market.
Since then, the price of Ether broke through $ 450 and continued its rally towards the recent high of $ 675. If that becomes the temporary high, a correction to $ 450-480 is likely. However, such a correction is very healthy for the markets and should fuel the next impulse wave.
Using the Fibonacci extension tool, such an impulse wave could send the ETH price to $ 900 and possibly even $ 1,300.
December has historically been a good month to enter altcoins
Since 2016, the Bitcoin dominance chart has peaked in the month of December, followed by a solid quarter for altcoins.
In that perspective, Bitcoin’s dominance shows a clear zone of resistance at the 67% -69% level. It is difficult to call this a zone of resistance as the Bitcoin dominance chart is not an asset that can be traded. But technical analysis can still be useful in this case.
If the dominance reverses here, a lower high is constructed again, resulting in a new high for December.
As the cryptocurrency market is in a bull-cycle for the first time since January 2018, the potential altcoin run could get relatively large. Such a rally could also see Bitcoin’s dominance drop to 48% -50%.
ETH / BTC has to bounce to show strength
The weekly chart for ETH / BTC tells the whole story. A breakout above 0.026 sats earlier this year propelled the price even higher with Ether rising towards 0.04 sats – the range resistance from the previous accumulation period. This resistance could not break all at once, after which ETH / BTC dropped significantly.
The main focus now is the range between 0.0245-0.026 sats as that zone used to be the resistance. As long as this area holds, more upside potential can be expected in the first quarter of 2021.
However, altcoins don’t perform well when Bitcoin is volatile. Hence, Ether and altcoin traders must keep an eye on Bitcoin, which must stabilize and / or consolidate to ensure a strong breakout.
The views and opinions expressed here are solely those of the writer and do not necessarily reflect Cointelegraph’s opinion. Every investment and trade move carries risks. You should do your own research when making a decision.