Bitcoin has been explosive throughout 2020, and while certain altcoins like Ethereum and a slew of DeFi tokens have outperformed the best cryptocurrency this year, altcoins have generally been a disappointment compared to previous cycles.
Those who have experienced previous cycles expected altcoins to take off as Bitcoin surpassed its previous peak. But that moment has come and gone, and while there has been some glimpses of positive momentum, the asset class as a whole is lagging behind BTC. This is reflected in BTC’s dominance, which could end 2020 with a dangerous-looking doji candle, hinting at “indecision” and possible downfall for altcoins in 2021.
Indecision of the Crypto Market: Bitcoin dominance ends 2020 with a Doji candle
From the cryptocurrency bear market floor to current prices, altcoins have been left in the dust of Bitcoin. The leading cryptocurrency by market cap has led the bullish charge and is already trading nearly $ 10,000 above its former all-time high.
But altcoins are nowhere in sight, and not even in Bitcoin’s rearview mirror right now. The divergence in capital flow between the two types of crypto assets has been caused BTC dominance – a metric that measures the top crypto assets versus other altcoins based on market capitalization – to rise to 70%.
Related reading | Ripple Lawsuit Triggers XRP Led Altcoin Apocalypse
70% dominance is roughly where dominance started the year, despite the roller coaster ride of a year that was 2020. Because the distance between the annual opening and closing can be so narrow, there is a risk that the annual candle close like a doji.
A red doji could be left behind on the 2020 BTC dominance chart | Source: CRYPTOCAP-BTC.D on TradingView.com
Doji are dangerous because they indicate indecision and make choosing a direction less obvious. They form at the top trends when they reverse or just before the sequel when a market takes a break.
The six month candle pictured below shows that 70% dominance has acted like one strong resistance level in the past, and why it is such a challenge to break right now. It can also act as a point where dominance changes, Bitcoin is bleeding or stagnating, and altcoins rocket away into the sunset.
Unfortunately, there are other technical and fundamental factors that indicate that this will not happen in 2021.
Six-month resistance could soon be flipped to support | Source: CRYPTOCAP-BTC.D on TradingView.com
The technical and fundamental reasons for the arrival Altcoin Apocalypse
If you zoom out further to the quarterly candles below, the 70% level appears poised to break. A close above the resistance level would lead to a strong push higher, take BTC dominance in the range of 80 and 90%.
The idea may sound unreasonable with all projects in the crypto market compared to Bitcoin, but the sentiment around altcoins is getting worse.
Quarterly charts suggest that resistance at 70% dominance will soon break | Source: CRYPTOCAP-BTC.D on TradingView.com
Few have delivered on the promises made three years ago, while Bitcoin has taken on a whole new story that has caught on in a major way. Failure to produce any form of FOMO like the last alt seasonEven after BTC hit its all-time high, holders have questioned their stance.
Is an ascending triangle on BTC.D about to annihilate altcoins? | Source: CRYPTOCAP-BTC.D on TradingView.com
And while that could change and traditional funding can also target DeFi tokens, the SEC’s recent attack on crypto via Ripple could be the fatal blow to altcoins, skyrocketing BTC’s dominance.
According to the industry’s top analysts, the SEC is “snooping” around others altcoin projects and companies, and can continue to take pictures of the industry throughout the new year.
The price action resulting from institutions being so optimistic about Bitcoin compared to altcoins could form a huge, multi-year bullish triangle pattern on BTC’s dominance. And if this pattern surfaces, altcoins will be doomed in 2021.
Featured image from Deposit Photos, Charts from, TradingView.com