Key Takeaways
The conditions across the crypto markets were strongly bullish. Ethereum approached the $4K resistance, and Bitcoin managed to recover from its retracement to $112k. Yet, there was reason to think altcoins might not be ready for a sustained rally.
Ethereum [ETH] was closing in on the psychological $4K mark. Toward the end of July, ETH bulls faced rejection from $3,941. At press time, the price of the leading altcoin was just a few dollars short of this mark.
Ethereum faced high selling pressure even as it closed in on the nearby psychological round-number resistance.
On-chain activity was elevated, which could spur demand for ETH and sustain the rally. Demand from institutions and treasury firms was on the rise, and Tom Lee’s $6,000 prediction for Ethereum is not outlandish.
With the selling pressure on Ethereum in mind, AMBCrypto examined the Bitcoin Dominance (BTC.D) and the altcoin market capitalization to see if altcoin traders should consider taking profits soon.
Range formation and warning signs from Bitcoin Dominance
Source: TOTAL2 on TradingView
The altcoin market capitalization has moved within a range since July. This range extended from $1.34 trillion to $1.54 trillion. At the time of writing, TOTAL2 was at $1.5 trillion. It has room to expand slightly before reaching to local range extremes.
In general, traders should expect a range to continue until it is broken. Betting on a breakout each time the candles approach the extremes could quickly prove disastrous.
Hence, until we see the altcoin market cap move past $1.54 trillion, traders wouldn’t want to bet on a breakout.
Bitcoin’s recent bounce from $113.1K this week saw many altcoins surge higher. Led by Ethereum, the sentiment across the crypto space was bullish.
Therefore, altcoin traders in long positions might want to book profits and wait for the next move.
Source: BTC.D on TradingView
The BTC.D chart has also been range-bound for the past three weeks and is currently sitting at a local support level. A bounce here would indicate that Bitcoin is outperforming altcoins.
Meanwhile, Ethereum is expected to reach new all-time highs, driven by strong corporate demand that continues regardless of price. However, this breakout may not happen immediately.
Given current trends in altcoin market cap and BTC dominance, risk-averse traders might prefer to take profits now rather than bet on an imminent breakout.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
