- Bitcoin dominance faces a reversal as the stochastic oscillator exits overbought territory, signaling potential altcoin momentum.
- A symmetrical triangle pattern suggests a breakout, with indicators pointing to a bearish move favoring altcoins over Bitcoin.
- Historical cycles show Bitcoin dominance weakens after extended overbought periods, creating conditions for an altcoin surge.
Bitcoin dominance is now reaching a level where the changing dynamics could take center stage. Momentum, specifically the stochastic oscillator, has started to cross out of overbought territory. If history were to repeat itself, then this would mean a decline in Bitcoin’s market share and an altcoin surge.
The dominance chart of Bitcoin formed a symmetrical triangle that had been posting lower highs and higher lows indicating consolidation before a breakout. Further, historical trends indicated that dominance rose during altcoin bear markets and fell during their bull runs.
Stochastic Oscillator Signals Bearish Shift
According to Titan of Crypto, Bitcoin dominance previously entered the overbought territory in 2018 and again in 2024. Both instances led to significant downturns. The first overbought cycle lasted 15 bars (609 days), while the second extended to 19 bars (763 days).
Source: Titan Of Crypto
During these cycles, trading volumes were substantial, reaching 10.23T and 22.97T, respectively. The current downward movement in the stochastic oscillator strongly suggests Bitcoin’s dominance may decline further. Consequently, altcoins are expected to gain traction as capital rotates away from Bitcoin.
Chart Patterns and Market Behavior
The symmetrical triangle formation implies price compression, which typically precedes a breakout. With the stochastic oscillator trending downward, a bearish breakout appears more probable. Pink candlesticks on the chart further highlight the likelihood of a continued decline.
Moreover, support and resistance levels within the triangle’s boundaries act as key price zones. These areas will play a crucial role in determining Bitcoin dominance’s next move. If the pattern holds, Bitcoin dominance could continue its downward trajectory before finding support at historically oversold levels.
Market cycles indicate that Bitcoin dominance fluctuates based on altcoin performance. When Bitcoin dominance weakens, altcoins tend to thrive. The extended overbought period suggests exhaustion, reinforcing the possibility of an altcoin-friendly environment.
