As Bitcoin (BTC) languishes, the Total Crypto Market Cap has recently been rejected from the important $2.3 trillion level. Is this the beginning of a full-out rejection, or is this just a small bump in the road for crypto before it definitively breaks out of a seven month bull flag?
All eyes on Bitcoin still
All eyes are probably on Bitcoin as it battles to stay above a bull flag which is also many months in the making. Should the king of the cryptocurrencies break down conclusively, the altcoins would be hit incredibly hard, and all the gains of the last three months would likely be wiped out.
That said, Bitcoin bulls are putting up a fight, and as long as the $BTC price can turn around in the next day or so, this will probably just be looked back upon as a minor correction as both Bitcoin and the top-performing cryptocurrencies transition into what could be the last stage of this bull market.
Total Crypto Market Cap rejects from top of bull flag
Source: TradingView
From the daily chart above, it can be seen that the Total Crypto Market Cap has been rejected from the top of the bull flag. Currently, the price is sitting at a fairly strong level of horizontal support at $2.24 trillion. If the combined market cap did fall through this support, further levels can uphold the price. There is also an ascending trendline which could provide support. The very worst scenario could be a descent under $2 trillion, which would result in a lower low.
USDT Dominance is bellwether for crypto
Source: TradingView
USDT Dominance (USDT.D) is an excellent bellwether for the overall health of crypto. The daily chart for USDT.D is showing a general ascending trend. However, this broke down recently. The gains in favour of USDT.D over the last few days may just have been a return to the ascending trendline in order to confirm the breakdown. The next few days will either bear this out, or a break back above the trendline will result.
$DXY strength bad for crypto
Source: TradingView
Another indication of the health of crypto can be found in the US Dollar Index (DXY). The $DXY charts the strength of the dollar against a basket of world fiat currencies. Generally, if the dollar is strong, this is bad for crypto, but in the reverse case, if the dollar is weak, crypto is more likely to see upside.
It can be seen in the chart above that the $DXY has rallied strongly over the last three weeks. That said, the $DXY has reached a good horizontal resistance, and has just touched the descending trendline. A rejection would mean that upside for crypto, while a breakout and confirmation above would lead to lower prices for crypto.
That said, the weekly Stochastic RSI for the $DXY has reached the top. This means that there is a likelihood that this indicator could cross back down in the near term. This could lead to falling price momentum for the dollar – a situation that would be advantageous for crypto.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
