A Strategy Guide For Trading Altcoins With Bitcoin DominanceOne of the most common questions I get when it comes to altcoins is, "should I trade or should i just buy and hold?"
For most people, buying and holding (or hodling) is often times the best answer.
It's less time intensive and you don't have to think about it too much.
The problem (and often asked question) is, "when should I start buying?"
For that, I would highly recommend familiarizing yourself with the dominance charts on Trading View and the cyclical nature of alts vs bitcoin.
To find the Bitcoin dominance chart (which is what we are using right now), just type in BTC.D in your tradingview indicator at the top.
What is Bitcoin dominance?
Bitcoin dominance is the ratio between the market cap of Bitcoin to the rest of the cryptocurrency markets.
A KEY FACT:
Just because Bitcoin dominance goes UP doesn't mean that Bitcoin price is also going up. It means that it's market share is going up relative to the rest of the market.
In 2018, we saw a flight of capital from small cap and mid cap altcoins into Bitcoin where dominance went up, but Bitcoin's price continued to go down and even capitulated towards the $3200 level.
What the dominance actually represents is the relative value of alts VS Bitcoin. (i.e. XXXBTC pairs for altcoins.)
So when dominance is falling, that means that the altcoin pairs (typically majors and mid caps) are gaining value relative to the BTC pair.
Vice versa, when dominance is going up, altcoins (typically majors) are losing value relative to bitcoin value.
This is where it gets tricky trading altcoins or being a hodler in general.
Sometiems, you can gain BTC value but lose USD value if Bitcoin falls faster than your altcoin gains value relative to bitcoin.
If, say you want to go long on XRPBTC (to gain bitcoin), we can see that we saw a very good opportunity last week when I sent the XRPBTC chart.
Even easier to see on the 4 hour time frame here:
To update:
Okay, so we got our pull back to the 2750 level and took a long on it.
Our current trade is in profit for 24% in Bitcoin value. This means that if we had put 1 BTC into the trade, we would now be at 1.24 BTC in total value for XRP.
Awesome!
Now, let's check out the XRPUSD chart to see how we are doing in USD value.
Because we bought the BTC pair, we bought the XRP pair around $.236
The value is now at $.285 and we are now up 20% in USD value.
If you had put in $10,000, you'd now be up $2,000 for a total of $12,200. - A 20% gain so far.
As you can see, there is over a 4% difference in Bitcoin value and USD value relative to the gains.
This is much more exaggerated during Bitcoin volatility, which means we need to be especially careful buying a bullish altcoin set-up when Bitcoin is at high time frame resistance.
Comparing price and dominance side by side, you can see the point that 'dominance' doesn't equal bullishness even better.
Bitcoin dominance went up over 100% from Jan 1 2018 until Oct 2019.
In the same time span, bitcoin price dropped 80% and also went up 330% from the bottom.
These 3 charts give you a little better perspective on the higher time frames.
On Jan 1, we saw the bottom of altcoin dominance and a confirmed bullish bounce.
Bitcoin went down 80% in USD but rose by 330% off of its bottom while dominance continued to climb.
Ripple (XRP), on the other hand declined by 94% in USD value and 78% in Bitcoin value and is only up 40% in BTC value from the lows and is up this month about 20% from the lows.
The only period of time that was a good time to hold Ripple was actually where went down and was flat in September of 2018 where Ripple went up 160% in USD value.
If you buy an altcoin and the dominance level stays the same, meaning the Bitcoin value relative to the altcoin stays the same, then you will 'maintain' your bitcoin value and lose USD value for the trade.
Some people ONLY care about 'stacking sats' no matter what the price of Bitcoin is at. This is because they believe in the long term viability of Bitcoin and think that the price will appreciate no matter what.
If you want to 'hodl' an altcoin for long term, it is always better to buy or scale into altcoins when dominance is at high levels at key resistances and showing confirmed signs of weakness than it is to buy at the bottom of dominance levels.
This is because you will be subject to massive draw downs in relative bitcoin value, whereas your USD value may hold well.
A real life example using XRP
You take $32,000 in cash and buy Bitcoin on Dec. 10th, 2018 when Bitcoin was at $3,200.
You now have 10 Bitcoin.
You then take the Bitcoin and buy XRP.
XRP USD value iwas at $.29.
XRPBTC value was at 0.00008700
You now have 114,000 XRP.
To date, your total bitcoin value would be at 4 Bitcoin worth of XRP.
Your total USD value would be roughtly $31,500.
This is the true cyclical nature of the cryptocurrency markets.
If you are looking for exposure to a specific 'class' of altcoins, you can also trade indexes.
On some exchanges, they have mid cap and small cap altcoin indexes that you can get exposure to without having to buy individual altcoins themselves.
You can also use a 'futures' contract to 'hedge' a portfolio of altcoins if you are a hodler.
There are lot of nuances and strategies that you can use when it comes to trading cryptocurrencies, but hopefully this guide gave you a good idea of when to long altcoins and when to short altcoins based on the dominance of Bitcoin in the market.
Hopefully this helped you get a better idea of when to short and long altcoins.
If you enjoyed the read, please consider giving a +1 to the chart and sharing it with your friends.
Thanks for reading!
Btcd
BTC Dominance Can Move Higher | Altcoins Can Grow As WellThe BTC Dominance (BTC.D) chart is looking bullish now after breaking above EMA10.
We can see that Bitcoin is trying to move higher on a bounce, so it is easy to see why this chart is also bullish.
The TOP altcoins (ETH, ADA, BCH, LTC, etc.) are looking bearish against Bitcoin, but the remain altcoins (the alts/smaller cap.) are looking bullish vs Bitcoin... So we are likely to see Bitcoin and the Altcoins growing at the same time.
Thanks a lot for reading.
Namaste.
Another Wave for ALTsBitcoin Dominance is about to start yet another wave down. This time it should reach 67.66% level which would provide further clues on the BTC.D direction. Break below would confirm a strong downtrend, while rejection of this level should lead to a consolidational period. Get more Alts while its not too late.
Bitcoin Dominance - Technical saying down...Look's like Alt-Season after all. Well, let's not get ahead of ourselves but let us be realistic. And if we can being realistic is the best thing we can do. BTC dominance coming down is good for the alt-coins to bring back some of those satoshi's and some great trading opportunities.
I'd wait...
Altcoin Season Ends Before the End of the YearBitcoin dominance is falling rapidly, which shows growing interest in Altcoins, especially top Altcoins which have enabled Margin Trading.
From what it seems, the alt season has already started, but it might not last that long. According to my analisis BTC.D will continue to move down, towards 60% dominance till the end of this year.
Then BTC might take the lead once again.... BUT, if the support will be broken, this will be indication of a growing interest in blockchain overall, and BTC.D might go down to 30-40%. This would be a true paradice for TOP Alts.
It Is The Altcoins Time To GrowIt is time for the Altcoins markets to grow...
TOTAL2 Chart Signals
Break above EMA50.
Increasing volume.
Market cycle favors altcoins growth.
Bullish RSI and MACD.
Below is an excerpt from my latest Bitcoin & Altcoins Market Update...
Thanks a lot for the support!
Altcoins Market Update
Yikes! The altcoins are already paying and paying big... The reason we go for altcoins vs Bitcoin is because of their size...
Bitcoin is small compared to conventional assets, but if you compare Bitcoin to the cryptocurrency market altcoins, Bitcoin is BIG while the altcoins are SMALL.
If you have a good eye, confidence, and trust, you can find many opportunities looking at the smaller projects that are coming up.
So we focus on the altcoins because they offer higher profits potential and endless opportunities for all of us.
The altcoins market is already producing great results... But we are only getting started... We are still trading near the bottom, for most pairs... We will be enjoying growth/profits for years to come.
Feel free to leave a comment and share your thoughts about Bitcoin, Altcoins and the Next Cryptocurrency Bull Market Run!
Namaste.
Market Cap BTC Dominance Shows Additional WeaknessWe looked at the Market Cap BTC Dominance (BTC.D) chart recently and noticed a potential top/peak being hit.
This was marked by bearish divergence coming up on both indicators, MACD and RSI, as well as decreasing volume and alts season coming up.
Now, we are seeing BTC.D move and close below EMA10 (72.11) for the second time.
If the last low at 72.00 fails, we are very likely to see BTC.D move lower to 70.53 - 71.00, followed by 69.65 which is the 0.236 Fib. retracement from the last bullish wave.
The main potential scenarios are drawn on the chart.
Where do you think Bitcoin (BTCUSD) is headed?
Share your thoughts in the comments section below...
Bitcoin (XBTUSD) Full Short Trade | 70% on 8X Lev
EOS Long-term | 530%+ Profits Potential to ATH
Ripple (XRPU19) Full Long Trade | 230% ROE on 7X
Thanks a lot for reading.
Namaste.
Market Cap BTC Dominance Breaks Support (Where To Next?)BTC Dominance (BTC.D) just broke and closed below our main support EMA10 (72.41), sending out a bearish signal.
We are seeing increasing bearish action and a top formation when the last peak produced strong bearish divergence with the MACD and RSI.
The major trendline holding BTC.D has also been broken.
The next support levels are marked in the chart with dashed blue lines.
Conditions for change
If BTC.D closes above 73.55 with good strength and volume, the above signals become invalid.
Longer-term analysis for the Bitcoin Dominance (BTC.D) chart:
Namaste.
BITCOIN DOMINANCE TOPPED OUT - ALTCOIN SEASON IS OPENWe are witnessing a very top of the BTC dominance, it could be either a long term decline or a strong corrective move down.
Its time to earn some bitcoins, this correction is expected to last 2-5 months.
Get in Alts early... not an advice, but something that I did ))))))
PROFITS TO ALL!
BTC Dominance Facing Resistance Soon! (Where To Next?)BTC.D has been moving higher and higher with only a few weeks stop in between each new peak... But it seems that it is running out of steam.
Bearish signals coming from the chart
We have low and decreasing volume.
Bearish divergence showing up on the MACD and RSI.
Strong resistance ahead.
RSI Overbought.
Our main scenario is marked with arrows on the chart. The situation can easily change if the next resistance at 74.84 is broken with good strength and volume.
If BTC.D fails to reach 74.84 and close above it, it is very likely to move lower as shown on the chart.
On a drop, the first/main level to be tested would be 69.11 or EMA10. A new update will be shared based on how the charts behave.
Thanks a lot for reading.
Namaste.