If Bitcoin is still largely dominant compared to Ethereum, the gap is closing between the two biggest crypto projects. Because if Bitcoin seems close to its lowest levels of the year, Ethereum goes the opposite by going over 20%, a historically high figure for the prince of cryptocurrencies.
Bitcoin dominance flirts with 40%!
Since mid-June, Bitcoin Dominance has been on the decline, as the following chart indicates:
Although it exceeded 48% in mid-June, Bitcoin’s dominance fell significantly in the second half of June. Ethereum’s outperformance compared to Bitcoin has also affected Bitcoin Dominance, which is only 40.51% as of August 16.
Many note that this 40% level is a major psychological resistance for the markets. If last January, Bitcoin Dominance fell below 40%, it only lasted a few days. It is not enough to validate the hypothesis of a long passage below this threshold. Proponents of this theory believe that Bitcoin could break out of the crypto market and do better in the coming weeks. A feature that is also justified by the upward trend of the RSI in weekly data.
The daily RSI meanwhile suggests that Bitcoin is in an oversold zone. The last time this was seen, the asset saw significant bullish movement.
The Merge effect for Ethereum
For Ethereum, it is the opposite, with a strong resume of dominance. The following chart shows the evolution of Ethereum Dominance over the past 12 months:
The Compound Effect particularly visible in this graph. In mid-July, Ethereum developers announce a specific date for The Merge to go live scheduled for September 19. Within days, Ethereum Dominance is rising. It, which fell to greater levels seen from April 2021, quickly goes from 15 to 19%. During his rally, he even flirted with 21% last week. At the time of writing, Ethereum Dominance is 20.51% according to data from the Tradingview platform.
Currently, Ethereum accounts for half of the total Bitcoin market. Between them, the two flagships still weigh more than 60% of the crypto market. A crypto market whose total valuation is estimated at more than $1.15 trillion according to the Coinmarketcap platform.
Undoubtedly, the ratio ETH / BTC, which is widely used in trade, is increasing and it usually leads graphically to the superior performance of Ethereum compared to Bitcoin. In the last 30 days, Ethereum has increased by 40%, against only 13% for BTC. Looking at the last 60 days, Bitcoin is doing a little better with 14% upside. But Ethereum completely outperforms the mother of cryptocurrencies with a price increase of 75% over the same period.
Are we heading towards Bitcoin season?
As we have seen, several technical indicators point to a strong rebound in Bitcoin Dominance in the coming weeks.
If the main stock markets show a great recovery, like most altcoins elsewhere, Bitcoin seems to be playing the clock. Three remained stuck below the threshold of 25,000 dollars. A portal that will undoubtedly be the fate in the short term for the recovery of the mother of cryptocurrencies.
But investors will also keep a close eye on major macroeconomic indicators. And with inflation in the first place. Although July’s US inflation data was encouraging, the market is mainly awaiting confirmation for August.