Bitcoin Dominance Signals Bearish Trend As Retail Activity Rises
- Bitcoin Dominance shows bearish signs with a Doji candlestick pattern and volume divergence signaling a potential reversal.
- Rising wedge formation since March 2023 could trigger a flash crash, adding pressure to Bitcoin Dominances trend.
- Retail activity has risen by 13% in 30 days, signaling renewed interest from smaller investors amid Bitcoins looming move.
The dominance of Bitcoin is looking shaky at the moment, with several bearish signals suggesting that the market may be set to turn bearish. On Tuesday in an X post, Alan Santana pointed out three major warning signs for the Bitcoin Dominance (BTC.D) when retail investors are coming back to the market after the long inactivity period.
Santana also highlighted several key markers, including a Doji candlestick pattern that showed up on September 16th. This pattern is common during market consolidation, and the situation is more worrisome when it appears at the peak of a trend. When we look at the bearish volumes which reached their peak in March, this signal indicate that Bitcoin Dominance might be looking for a reversal.
Bitcoin Rising Wedge Risks
The next bearish indicator could be observed from the rising wedge formation since March 2023. Rising wedges are more bearish and when they breakdown they lead to a sharp and quick sell off. This pattern could lead to a flash crash, as such structures become rather fragile as soon they break.
There is also a marked difference between the Bitcoin Dominance and trading volume that strengthens the bearish view. Although BTC.D is still in an uptrend, its volume has been decreasing which has given a bearish divergence. This divergence is a typical signal that momentum is getting exhausted, thus, the market is under risk of a decline.
Besides these technical indicators, the analyst used Fibonacci time analysis to predict when the next big move of Bitcoin is expected to happen. The current recovery wave of bitcoin started on August 5th and has been in progress for 77 days. According to the Fibonacci ratios, a major price shift is about to occur in the market soon. The direction of a breakout, either up or down, is still unknown, but the breakout is expected to happen soon.
Bitcoin Retail Activity Surge
While these signals have been flashing, retail involvement in the Bitcoin network has picked up. CryptoQuant data shows that transactions below $10,000 have risen by 13% within the last 30 days which is the highest level of retail participation since March. This pick up in trade volume of small sizes is an indication of retail investors returning to the market, which is a positive change in market sentiment.
In the last four months, whales, the large investors, have kept their transaction volume high while the retail activity, has been decreasing. However the recent upsurge in the small size of transactions may suggest that the retail traders have become less risk averse as they get back into the market.
While Bitcoin Dominance is indicating weakness and there are signs of retail investors coming back into the market, a major move could be on the horizon over the next few weeks. Only time will tell if this will cause a major spike or a steep drop.
Read more: https://www.tronweekly.com/bitcoin-dominance-signals-bearish-trend/
Text source: TronWeekly
