Bitcoin’s Grip Weakens as Altcoins Prep for Breakout—Is the King Overbought?

Bitcoin dominance hits a tipping point—technical indicators scream ’overbought’ while altcoins lurk at historic discount levels. Ethereum, Solana, and BNB lead the charge as traders rotate out of BTC’s exhausted rally.

Market cycles suggest an imminent alt season, but Wall Street’s latest ’safe-haven’ crypto ETF (priced at a 2% management fee, naturally) might delay the party. Watch for BTC dominance breaking below 50% as the signal flare.

Bitcoin dominance is at risk of a pullback

The weekly chart shows that Bitcoin dominance bottomed out at 38.86% in 2021 and 2022, before staging a strong rally to 65.4% today. It remains above the 50-week and 100-week moving averages, while the Average Directional Index has climbed to 43. An ADX above 25 generally signals strong bullish momentum.

However, the dominance has also formed a rising wedge pattern, while its Relative Strength Index has moved to the overbought level at 74.10. This is a sign that the dominance will have a reversal soon as investors rotate to altcoins. This rotation will likely happen when the dominance hits 72.92%, its highest level in December 2022.

Altcoins have formed a megaphone pattern

The weekly chart for altcoins (excluding Bitcoin) shows the formation of a bullish megaphone pattern, characterized by two diverging upward trendlines. The market cap has recently pulled back to the lower boundary of the pattern, indicating a potential rebound as bulls aim for the upper trendline.

Altcoins have also completed much of the bullish harmonic XABCD pattern and are now forming the final CD leg. As long as the market cap remains above the lower trendline, the likelihood of an upcoming altcoin season remains high.