Key Points
- Bitcoin’s dominance and a technical indicator suggest it might be time for swing traders to consider altcoins.
- Coin days destroyed (CDD) metric and BTC’s dominance chart are useful tools to gauge market sentiment and altcoin strength.
Bitcoin’s dominance and a certain technical indicator seem to indicate that it could be a suitable time for swing traders to turn their attention towards altcoins.
The relative strength against Bitcoin (BTC) is a significant factor to consider, along with long-term support zones, when assessing underperforming altcoins.
Bitcoin’s Market Behavior
At the moment, BTC is trading within a certain range. Given its short-term bearish bias, neither Bitcoin nor the rest of the cryptocurrency market seems appealing to long-term investors.
The market might require a few weeks to consolidate, particularly in light of the substantial gains made in the months leading up to the halving. This could potentially provide a buying opportunity for altcoins that have demonstrated strength.
Assessing Market Sentiment
Coin days destroyed (CDD) is a metric used to measure the age of coins moved during a transaction. A significant spike in CDD suggests that Bitcoin that has been dormant for a long time has been moved.
The Bitcoin Dominance chart, which measures BTC’s market capitalization as a percentage of the total crypto market capitalization, stood at 54.68% at press time. If BTC’s dominance continues its downtrend, it might provide altcoins with an opportunity to make gains.
Crypto analyst Ali Martinez recently pointed out that the TD Sequential Indicator flashed a buy signal for Chainlink (LINK) on the 12-hour chart. However, LINK lost nearly 33% since March 26th.
An altcoin shows strength when it holds up reasonably well against BTC losses. LINK, however, did not display strength against Bitcoin in the past month.
The liquidation heatmap indicated that $16, $18 and $19.5 were the regions with the highest concentration of liquidation levels to the north. These levels were marked as bullish targets. However, the downtrend was still in effect.
The liquidity at $13.5 and $12.5 was much closer and more likely for LINK prices to reach in the coming weeks. Hence, despite BTC Dominance and the TD sequential giving swing traders a reason to go long, the potential for a drop to these support levels must be kept in mind before entering trade positions.
