Ether’s price weakness against Bitcoin is bad news for altcoins if ETH doesn’t recover soon.
Everything revolves around Bitcoin (BTC) in recent months, and the altcoins are suffering from BTC dominance, which has reached a new high of 67.5% in recent days.
However, a change in the outlook usually occurs when the altcoins begin to show this great weakness and the altcoins traders are pessimistic. The main indicator for such a reversal is Ether (ETH), who is now in a position of or dying against his BTC pair.
In this perspective, Bitcoin Union dominance shows a clear zone of resistance at the 67-69% level. It is difficult to call this a resistance zone, because the Bitcoin dominance graph is not an asset that can be traded. But technical analysis can still be useful in this case.
ETH’s new high on the uptrend from the down market
ETH / USD Chart 1 week.
The above chart speaks for itself, showing a new uptrend since the break-up above $300 earlier this year, when buyers immediately found support in this region. This was a break from a multi-year accumulation range, which increases the likelihood of the market continuing to rise.
Since then, Ether’s price broke $450 and continued its rise toward $675. If this becomes the temporary top, a correction to $450-480 is likely. However, the correction is very healthy for the markets and should provide fuel for the next bullish wave.
Using the Fibonacci Extension Tool, such a surge could raise the ETH price to $900 and possibly up to $1,300.
December is historically a good month to enter altcoins
BTC Dominance 1 week chart.
Since 2016, Bitcoin’s level of dominance reaches a peak in December, followed by a solid quarter for the altcoins.
If the dominance reverses here, then another lower high will be built, resulting in another peak for December.
Since the market for cryptomorphs is in a bullish cycle for the first time since January 2018, the potential altcoin run could become relatively large. Such a rally may also see Bitcoin’s dominance drop to 48-50%.
ETH/BTC must react to show strength
The ETH/BTC weekly chart makes the picture clear. A break above 0.026 sats earlier this year boosted the price even higher, with Ether rising towards 0.04 sats – the range resistance of the previous accumulation period. This resistance cannot break at once, as after that the ETH/BTC pair falls significantly.
The main point of interest now is the range between 0.0245-0.026 sats, as this zone used to be a resistance. As long as this area remains, higher should be expected in the first quarter of 2021.
However, altcoins do not work well when Bitcoin is volatile. Therefore, Ether and altcoins traders should keep an eye on Bitcoin, which needs to stabilize and/or consolidate to guarantee a strong break.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of the Cointelegraph. Every investment and negotiation movement involves risk. You must conduct your own research when making a decision.