The Correlation between dominance and bitcoin
Current post, we will talk and deeply analyze about current correlation between bitcoin and the dominance of bitcoin in this crypto market. There are 3 important key factors that affect the above chart. the first one is the turning point and the second one is the period before and after the turning point. I will tell you briefly about the psychology behind this turning point from negative to the positive side.
We can easily see that before the September 2019, the correlation between the these 2 are negative, but after that we see the positive correlation is coming (until recent period).
The Psychology behind it
During the period of June 2019 - September 2019, we can see that the dominance of bitcoin increased pretty significant, with the start of around 65%, it surged to the peak of almost 74%. But, during this period, we see the price of bitcoin is getting a lower high which made its correlation remain in negative side. This is way normal, because this anomaly occured after the huge parabolic movement since April 2019 and when the Bitcoin entered its first consolidation after those huge rally. In other word, this is because of the tiny capital who don't have knowledge of entering the market at its high and most of them thought that the price will continue its rally, but it happened against their will, because the institutionals thought in different way, the Institutionals trader want to trap the tiny capital to entered some positions so they could start to take some of their profit. This is why we saw a lot of trading volume on bitcoin during that time and we can see the significant increase of bitcoin's market cap.
And look at the period after the September 2019, The turning point of this correlation occured right after the price of the bitcoin broke down the descending triangle which gave a strong indication that the correction phase is in play! That's why the tiny capital, exit their long position and Panic sell happened. Following this price broke down, the dominance once again has shown a significant down trend with the huge money outflow from bitcoin. As simple as that.
I would say and firmly believe that the dominance of the bitcoin will goes down even harder and we could see the 50% of dominance level will occur in the future. We will see a huge money outflow from bitcoin but, huge inflow on most of altcoins to keep the market equilibrium alive and avoid the monopoly of bitcoin in this cryptocurrency universe.
Thank you
We can easily see that before the September 2019, the correlation between the these 2 are negative, but after that we see the positive correlation is coming (until recent period).
The Psychology behind it
During the period of June 2019 - September 2019, we can see that the dominance of bitcoin increased pretty significant, with the start of around 65%, it surged to the peak of almost 74%. But, during this period, we see the price of bitcoin is getting a lower high which made its correlation remain in negative side. This is way normal, because this anomaly occured after the huge parabolic movement since April 2019 and when the Bitcoin entered its first consolidation after those huge rally. In other word, this is because of the tiny capital who don't have knowledge of entering the market at its high and most of them thought that the price will continue its rally, but it happened against their will, because the institutionals thought in different way, the Institutionals trader want to trap the tiny capital to entered some positions so they could start to take some of their profit. This is why we saw a lot of trading volume on bitcoin during that time and we can see the significant increase of bitcoin's market cap.
And look at the period after the September 2019, The turning point of this correlation occured right after the price of the bitcoin broke down the descending triangle which gave a strong indication that the correction phase is in play! That's why the tiny capital, exit their long position and Panic sell happened. Following this price broke down, the dominance once again has shown a significant down trend with the huge money outflow from bitcoin. As simple as that.
I would say and firmly believe that the dominance of the bitcoin will goes down even harder and we could see the 50% of dominance level will occur in the future. We will see a huge money outflow from bitcoin but, huge inflow on most of altcoins to keep the market equilibrium alive and avoid the monopoly of bitcoin in this cryptocurrency universe.
Thank you
