{"id":9206,"date":"2021-10-10T15:19:58","date_gmt":"2021-10-10T19:19:58","guid":{"rendered":"https:\/\/morpheustrading.com\/blog\/?p=9206"},"modified":"2021-10-10T15:54:26","modified_gmt":"2021-10-10T19:54:26","slug":"btc-dominance","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/btc-dominance\/","title":{"rendered":"Bitcoin Blasts Off, but will the Rest of the Crypto Market Soon Follow?"},"content":{"rendered":"\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/crypto.jpeg\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/crypto.jpeg\" alt=\"\" width=\"778\" height=\"414\" title=\"\"><\/a><\/figure><\/div>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">TABLE OF CONTENTS<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/morpheustrading.com\/blog\/btc-dominance\/#Bitcoin_broke_out_above_resistance_to_a_5-month_high_but_most_leading_altcoins_remain_in_a_range_Will_they_catch_up_The_Bitcoin_Dominance_Index_is_a_powerful_indicator_that_may_yield_the_answer_Heres_how_it_works%E2%80%A6\" >Bitcoin broke out above resistance to a 5-month high, but most leading altcoins remain in a range. Will they catch up? The Bitcoin Dominance Index is a powerful indicator that may yield the answer. Here&#8217;s how it works&#8230;<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/morpheustrading.com\/blog\/btc-dominance\/#Bitcoin_as_a_crypto_market_proxy\" >Bitcoin as a crypto market proxy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/morpheustrading.com\/blog\/btc-dominance\/#The_Secret_Sauce_Bitcoin_Dominance_Index_BTCD\" >The Secret Sauce: Bitcoin Dominance Index ($BTC.D)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/morpheustrading.com\/blog\/btc-dominance\/#Current_Trading_Plan\" >Current Trading Plan<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Bitcoin_broke_out_above_resistance_to_a_5-month_high_but_most_leading_altcoins_remain_in_a_range_Will_they_catch_up_The_Bitcoin_Dominance_Index_is_a_powerful_indicator_that_may_yield_the_answer_Heres_how_it_works%E2%80%A6\"><\/span>Bitcoin broke out above resistance to a 5-month high, but most leading altcoins remain in a range. Will they catch up? The Bitcoin Dominance Index is a powerful indicator that may yield the answer. Here&#8217;s how it works&#8230;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In our October 1 <a href=\"https:\/\/new.morpheustrading.com\/blog\/october-bitcoin-breakout\/\" target=\"_blank\" rel=\"noreferrer noopener\">post<\/a>, shared the chart below to show how Bitcoin ($BTC) kicked off the month by breaking out above several resistance levels:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/BTC100121.png\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/BTC100121.png\" alt=\"\" width=\"728\" height=\"644\" title=\"\"><\/a><figcaption><em>Press to view full-sized image<\/em><\/figcaption><\/figure><\/div>\n\n\n\n<p>We then said, &#8220;Short-term overhead resistance may be found in the $48,500 to $49,000 range (prior highs from mid-September), which could lead to a bit of price consolidation or pullback.&#8221;<\/p>\n\n\n\n<p>As anticipated, $BTC indeed consolidated in a tight range for several days after testing resistance of its mid-September high.<\/p>\n\n\n\n<p>However, the bulls quickly returned to propel Bitcoin all the way above the highs of last month&#8217;s pullback.<\/p>\n\n\n\n<p>That October 5 breakout above the prior September highs was quite powerful because it caused $BTC to also break out from a <a href=\"https:\/\/school.stockcharts.com\/doku.php?id=chart_analysis:chart_patterns:flag_pennant_continuation\" target=\"_blank\" rel=\"noreferrer noopener\">bullish pennant pattern<\/a> on the longer-term <em>weekly<\/em> chart timeframe.<\/p>\n\n\n\n<p>The pennant breakout and key support and resistance levels to monitor are annotated on the weekly chart below:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/BTCweekly10821.png\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/BTCweekly10821.png\" alt=\"\" width=\"728\" height=\"644\" title=\"\"><\/a><figcaption><em>Press to view full-sized image<\/em><\/figcaption><\/figure><\/div>\n\n\n\n<p>Currently, Bitcoin has been consolidating in a tight, sideways range for the past three days since breaking out above resistance of its September high (&#8220;B&#8221;).<\/p>\n\n\n\n<p>If the bullish, short-term consolidation follows through with another breakout above the current range highs (56,000 area), then<strong> <\/strong>watch for a <strong>potential $BTC pullback at next resistance of the 59,000-59,500 area (&#8220;C&#8221;).<\/strong><\/p>\n\n\n\n<p>In case of any near-term selling pressure, look for a <strong>$BTC shakeout to find support in the 52,000-53,000 area (&#8220;B&#8221;).<\/strong><\/p>\n\n\n\n<p>Bitcoin&#8217;s short-term price action and volume pattern of the past week has been <em>firmly bullish<\/em> overall.<\/p>\n\n\n\n<p>Drilling down to the 4-hour timeframe, just look at how smoothly Bitcoin has been trending higher since the initial October 1 breakout:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/BTC4hr100821.png\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/BTC4hr100821.png\" alt=\"\" width=\"728\" height=\"644\" title=\"\"><\/a><figcaption><em>Press to view full-sized image<\/em><\/figcaption><\/figure><\/div>\n\n\n\n<p>The chart above is a great example of why we frequently mention in the <strong><em><a href=\"https:\/\/morpheustrading.com\/services\/crypto-picks\" target=\"_blank\" rel=\"noreferrer noopener\">Crypto Trading Room<\/a><\/em> <\/strong> that crypto usually follows the rules of technical analysis and trends so nicely!<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Bitcoin_as_a_crypto_market_proxy\"><\/span>Bitcoin as a crypto market proxy<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The S&amp;P 500 and Nasdaq Composite indexes are popular <a href=\"https:\/\/www.investopedia.com\/terms\/m\/market-proxy.asp#:~:text=A%20market%20proxy%20is%20a%20broad%20representation%20of%20an%20overall,for%20the%20U.S.%20stock%20market.\" target=\"_blank\" rel=\"noreferrer noopener\">market proxies<\/a> that show the general health of the U.S. stock markets.<\/p>\n\n\n\n<p>Similar benchmark indexes do <em>not yet<\/em> exist in cryptoland, but the performance of $BTC itself is currently a market proxy for the overall cryptocurrency market.<\/p>\n\n\n\n<p>For example, a majority of the <a href=\"https:\/\/coingecko.com\" target=\"_blank\" rel=\"noreferrer noopener\">nearly 10,000 crypto altcoins<\/a> trend higher when Bitcoin is in a bull market, and lower when $BTC is in a bear market. <\/p>\n\n\n\n<p>This is why we regularly analyze the charts of Bitcoin&#8211;even though we trade leading altcoins more than $BTC itself.<\/p>\n\n\n\n<p>Still, a <strong>strong Bitcoin trend does <em>not<\/em> mean the altcoin market is automatically leading with massive gains.<\/strong><\/p>\n\n\n\n<p>Rather, there is another crucial indicator (nearly as important as Bitcoin&#8217;s trend) we follow to assess the overall altcoin market trend.<\/p>\n\n\n\n<p>Pay careful attention to the next section because understanding this key indicator will surely have a <strong>direct impact on your overall crypto trading profitability.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Secret_Sauce_Bitcoin_Dominance_Index_BTCD\"><\/span>The Secret Sauce: Bitcoin Dominance Index ($BTC.D)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>When I first began trading cryptocurrencies many years ago, I assumed that most altcoins would automatically move lower when Bitcoin sold off and higher when it rallied.<\/p>\n\n\n\n<p>I was only <em>partially<\/em> correct.<\/p>\n\n\n\n<p>Most altcoins will indeed move lower if Bitcoin is in a downtrend.<\/p>\n\n\n\n<p>But this does <em>not<\/em> mean the altcoin market will automatically move higher if Bitcoin is rallying.<\/p>\n\n\n\n<p>Rather, it depends on the current flow of funds that comprise the total 2.4 trillion dollar crypto market.<\/p>\n\n\n\n<p>Investors are sometimes more focused on buying altcoins&#8211;which have the potential for huge gains, but higher volatility and perceived risk.<\/p>\n\n\n\n<p>But sometimes the market is more focused on primarily buying Bitcoin itself.<\/p>\n\n\n\n<p>When investors rotate their crypto funds from Bitcoin to altcoins, it means that $BTC will comprise a smaller percentage of the overall crypto market cap.<\/p>\n\n\n\n<p>Conversely, the percentage weighting of Bitcoin (compared to total crypto market cap) increases when funds are rotated from altcoins back to Bitcoin. <\/p>\n\n\n\n<p>Our job as short to intermediate-term swing traders is simply to identify and follow that money flow, then position our portfolio accordingly.<\/p>\n\n\n\n<p>Following the powerful <a href=\"https:\/\/cryptocurrencyfacts.com\/what-is-bitcoin-dominance\/\" target=\"_blank\" rel=\"noreferrer noopener\">Bitcoin Dominance Index ($BTC.D)<\/a> is an easy and reliable way to do so.<\/p>\n\n\n\n<p><strong>Bitcoin Dominance Index simply measures how much of the total market cap of <em>all<\/em> cryptos is comprised solely of Bitcoin.<\/strong><\/p>\n\n\n\n<p>When $BTC.D is rising, it means altcoins overall are losing value versus Bitcoin.<\/p>\n\n\n\n<p>When the index is falling, the altcoin market is gaining value versus $BTC.<\/p>\n\n\n\n<p>Check out the current weekly chart of $BTC.D below:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/2BTCDweekly100821.png\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/2BTCDweekly100821.png\" alt=\"\" title=\"\"><\/a><figcaption><em>Press to view full-sized image<\/em><\/figcaption><\/figure><\/div>\n\n\n\n<p>The Bitcoin Dominance Index was trending steadily lower until it found a bottom in May.<\/p>\n\n\n\n<p>Bitcoin started re-gaining dominance as the market entered correction mode from May through July.<\/p>\n\n\n\n<p>Funds flowed into altcoins when the bulls returned in late July, causing the index to drift back down to its May lows.<\/p>\n\n\n\n<p>But now we&#8217;ve got a <strong>double bottom at the May lows, <\/strong>which coincides with the current rally in Bitcoin.<\/p>\n\n\n\n<p>Drilling down to the 4-hour chart, it becomes apparent the short-term trend of $BTC.D has reversed higher: <\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><a href=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/2BTCD100821.png\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2021\/2BTCD100821.png\" alt=\"\" title=\"\"><\/a><figcaption><em>Press to view full-sized image<\/em><\/figcaption><\/figure><\/div>\n\n\n\n<p>Bitcoin Dominance Index is likely to maintain its bullish, short-term momentum as long as Bitcoin continues trending higher.<\/p>\n\n\n\n<p>When Bitcoin eventually pulls back and takes a rest, then we may expect funds to start rotating back into the altcoin markets.<\/p>\n\n\n\n<p>This has been the <strong>typical, recurring cycle we have seen many times over the years.<\/strong><\/p>\n\n\n\n<p>Of course, a sudden flood of <em>new<\/em> money entering the crypto market could also enable altcoins to rally even while Bitcoin is still on center stage.<\/p>\n\n\n\n<p>In the meantime, this is the reason we have not been aggressively looking for new altcoin trades since Bitcoin broke out on October 1.<\/p>\n\n\n\n<p>This recent bullish reversal in Bitcoin Dominance Index helps you understand why your favorite altcoin may have been lagging while Bitcoin has been cruising steadily higher this month.<\/p>\n\n\n\n<p>This is also why we have been discussing $BTC.D so much in the <em>Crypto Trading Room<\/em> over the past week.<\/p>\n\n\n\n<p>Understanding and tracking the current trends of both Bitcoin <em>and<\/em> Bitcoin Dominance Index are two simple ways to increase your odds of crypto trading success.<\/p>\n\n\n\n<p>In the next issue of <a href=\"https:\/\/morpheustrading.com\/services\/crypto-picks\" target=\"_blank\" rel=\"noreferrer noopener\"><em>Morpheus Crypto Report<\/em>,<\/a> we will introduce subscribers to the third and final &#8220;big picture&#8221; indicator to put the odds of winning even more in their favor.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Current_Trading_Plan\"><\/span>Current Trading Plan<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>We are already taking advantage of the rising trend of Bitcoin Dominance Index with our recent $BTC buy entry in the Model Crypto Portfolio on October 7.<\/p>\n\n\n\n<p>We also have been lightening our overall allocation in altcoins to focus more on trading Bitcoin.<\/p>\n\n\n\n<p>The trend of $BTC.D in the coming week will largely determine our next moves in the model portfolio.<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/morpheustrading.com\/services\/crypto-picks\" target=\"_blank\" rel=\"noreferrer noopener\">Become a member now<\/a><\/strong> to automatically start receiving our exact entry and stop prices into the hottest crypto swing trades.<\/p>\n\n\n\n<p><em>Remember to trade what you see, not what you think!<\/em><\/p>\n\n\n\n<p>Deron Wagner, PhD (h.c.)<br>Founder @ Morpheus Trading Group<br>Co-founder @ MAST crypto fund<br><br><em><a href=\"https:\/\/twitter.com\/mtg_crypto\" target=\"_blank\" rel=\"noreferrer noopener\">Follow Us<\/a> on Twitter.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bitcoin broke out above resistance to a 5-month high, but most leading altcoins remain in a range. Will they catch up? The Bitcoin Dominance Index is a powerful indicator that may yield the answer. Here&#8217;s how it works&#8230; In our October 1 post, shared the chart below to show how Bitcoin ($BTC) kicked off the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[772],"tags":[],"class_list":["post-9206","post","type-post","status-publish","format-standard","hentry","category-crypto-trading-strategy"],"_links":{"self":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/9206","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/comments?post=9206"}],"version-history":[{"count":9,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/9206\/revisions"}],"predecessor-version":[{"id":9230,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/9206\/revisions\/9230"}],"wp:attachment":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media?parent=9206"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/categories?post=9206"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/tags?post=9206"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}