- Bitcoin dominance hit multi-year resistance near 64% before reversing with a bearish engulfing monthly candle.
- A fresh bearish MACD cross mirrors the technical alignment seen before the 2021 altseason surge.
- Historical patterns suggest potential capital rotation from Bitcoin into altcoins in the coming months.
Bitcoin dominance has broken down after hitting a long-term rejection zone, with multiple technical signals confirming the move. The monthly chart shows a decisive bearish engulfing candle, a setup that last preceded the major altseason of 2021.
Multi-Year Resistance Holds
According to an analysis prepared by Merlijn The Trader, it is notable that Bitcoin dominance reached a multi-year descending resistance line before turning lower. This resistance zone has repeatedly capped upward moves since 2017. The latest rejection came after dominance touched levels near 64% before closing lower for the month.
Source: XA further analysis reveals that the monthly bearish engulfing candle marked a strong reversal, engulfing the gains of the prior month. A similar candle pattern was recorded in mid-2020, just before dominance dropped sharply. That move coincided with a strong rally in the altcoin market. The Moving Average Convergence Divergence (MACD) indicator on the monthly timeframe shows a fresh bearish cross.
This occurs when the MACD line falls below the signal line, indicating a potential shift in trend momentum. The last bearish MACD cross in 2021 also followed a bearish engulfing candle at the resistance zone. That sequence was followed by a sharp drop in Bitcoin dominance, as capital rotated into altcoins. In the latest setup, the MACD histogram has turned negative after months of flat movement. This technical alignment mirrors the structure seen before the 2021 altcoin surge.
Dominance Structure Resembles Previous Cycle
The structure shows Bitcoin dominance moving within a long-term descending pattern . This pattern has been in place for over six years, with each rally into the resistance line followed by a rejection. The latest rejection has come with stronger selling pressure, as shown by the size of the bearish engulfing candle. Monthly dominance fell from a high of around 62.6% to 60.7% during the latest close.
With dominance trending lower, the setup aligns with the same market conditions that preceded the previous altseason. In 2021, altcoins gained market share within months of the pattern forming. Bitcoin dominance represents the share of the total cryptocurrency market held by Bitcoin.
A drop in this metric often indicates capital moving into altcoins. While technical indicators are aligned with previous cycle patterns, actual market movement will depend on broader conditions. Historical analysis shows that altcoin rallies during dominance declines can develop rapidly. The combination of a rejection at multi-year resistance, a bearish engulfing candle, and a bearish MACD cross has previously marked the start of such moves.
