Technical analysis shows Bitcoin dominance at resistance and ETH/BTC near support, often indicating capital rotation and large altcoin rallies in previous cycles.
Summary
- Bitcoin’s Dominance Nears Major Diagonal Resistance; ETH/BTC is trading at historic support, reflecting the 2017 and 2021 rally setups.
- Recent altcoin seasons started with these indicators aligning, leading to multi-month outperformance for alternative cryptocurrencies.
- Analysts warn that selling pressure continues and that historical patterns do not guarantee future rallies, but current chart signals indicate intent.
Cryptocurrency market indicators are showing patterns similar to those that preceded major altcoin rallies in 2017 and 2021, according to technical analysis shared by trader Merlijn The Trader.
The analysis focuses on the relationship between Bitcoin dominance and the ETH/BTC trading pair, two metrics that have historically signaled capital rotation from Bitcoin to alternative cryptocurrencies. Bitcoin’s dominance has approached a long-standing diagonal resistance line, while the ETH/BTC pair is trading near cyclical lows, according to chart data.
Historical patterns show that as Bitcoin (BTC) dominance returned from similar resistance levels, while ETH/BTC bottomed out in support zones, multi-month altcoin rallies followed in both 2017 and 2021. The chart marks these reversal points with red circles, each corresponding to the start of periods identified as altcoin seasons.
The ETH/BTC pair is currently in what the analysis identifies as a historic support area. Bitcoin’s dominance, measured as Bitcoin’s share of the total cryptocurrency market capitalization, shows signs of a possible reversal of the resistance levels according to the technical indicators presented.
Altcoin season
Previous altcoin seasons, marked in green zones on the map, began when Bitcoin dominance broke down and the ETH/BTC pair rose from oversold territory. The current positioning of both indicators resembles those previous turning points, according to the analysis.
The cryptocurrency market has seen selling pressure on major assets in recent weeks, with liquidity conditions remaining problematic. Bitcoin dominance and ETH/BTC matching patterns have preceded significant capital rotation in recent cycles, although there is no guarantee that historical patterns will repeat themselves, according to market observers.
Technical analysts note that market rotations have historically occurred during periods of negative sentiment. The indicators point to a potential setup for capital movement from Bitcoin to alternative cryptocurrencies if Bitcoin dominance returns from current levels, similar to previous cycle transitions.
