Key Highlights
The cryptocurrency market displayed strong upward momentum. Ethereum was nearing the $4,000 resistance level, while Bitcoin recovered from a dip back to $112,000. However, some indicators suggest that altcoins might not be ready for a sustained upswing.
Ethereum (ETH) was approaching the key psychological price point of $4,000. As July came to a close, ETH bulls encountered resistance at $3,941. Currently, the price of this leading altcoin hovers just below this mark.
Even as Ethereum approached this significant round-number resistance, it faced considerable selling pressure.
Elevated on-chain activity could stimulate demand for ETH and support its ongoing rise. Increasing demand from institutional investors and treasury firms suggests that Tom Lee’s prediction of $6,000 for Ethereum isn’t entirely unrealistic.
Considering the selling pressure faced by Ethereum, AMBCrypto analyzed Bitcoin Dominance (BTC.D) alongside the altcoin market capitalization to assess whether altcoin traders should consider securing profits soon.
Range Trading and Cautionary Signals from Bitcoin Dominance
Since July, the altcoin market capitalization has been moving within a defined range, oscillating between $1.34 trillion and $1.54 trillion. Currently, TOTAL2 stands at $1.5 trillion, leaving it with a limited upside before encountering the upper limit of its present range.
Generally, traders should anticipate a continuation of the established range until a clear breakout occurs. Prematurely betting on a breakout each time prices approach the range extremes could quickly lead to losses.
Therefore, traders should refrain from anticipating a breakout until the altcoin market cap surpasses the $1.54 trillion mark.
Bitcoin’s recent recovery from $113,100 this week triggered rallies in numerous altcoins, led by Ethereum, contributing to a bullish overall sentiment in the crypto space.
Consequently, altcoin traders holding long positions may want to consider taking profits and awaiting the next market development.
Source: BTC.D on TradingView
The BTC.D chart has also been trading within a range for the past three weeks and is currently situated at a local support level. A bounce from this level could indicate that Bitcoin is performing better than altcoins.
Meanwhile, Ethereum is projected to achieve new all-time highs, fueled by persistent strong demand from corporate entities, irrespective of price fluctuations. However, this potential breakout might not occur immediately.
Considering the current trends in altcoin market capitalization and Bitcoin dominance, traders with a lower risk tolerance might find it preferable to secure profits now rather than gambling on an impending breakout.
Disclaimer: This information is for informational purposes only and does not constitute financial, investment, or trading advice. The views expressed are solely those of the author.