The MTC dominance index will suit …

The MTC dominance index will suit …

Calculating Simpson’s Diversity Index

Contents

PTS dominance index to stage farewell tour before fall
CONTENT

  • Bitcoin Dominance Index BTCD Rises Since May 7.

  • The index has formed a triple bottom on the short-term chart.

  • In the long term, it corrects with a target of 58%.

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The Bitcoin Dominance Index has reached an important support area that could trigger a rebound. However, the trend remains bearish and a decline is expected beyond the rebound..

Ongoing support

The Bitcoin Dominance Index (BTCD) peaked at 68.92% on May 7 and has been losing ground since then. The decline looks quite vigorous, especially after June 21. On that day, the index tested the 50- and 200-day moving averages (MA) as resistance and then fell sharply..

The aforementioned MAs formed a bearish crossover before that, which may be a signal of a bearish trend that has already begun.

As of this writing, the index is trading just below the 64.2% support area, which has been on the chart since March. Despite the decline under it, the current dynamics may be a retest of this area as a resistance, and we do not exclude the recovery of BTCD above it.

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In order to try to predict further dynamics, we need to analyze shorter timeframes..

The short-term chart confirms the likelihood of such a rebound. Here the market has formed a triple bottom, which is traditionally considered a bullish reversal pattern. In addition, the RSI provides strong bullish divergence signals.

This promises the index a rise and recovery above the aforementioned support area. The most likely area for a reversal could be the 0.5 Fib level at 65.16%, or the 0.382 Fib level at 64.85%.

The MTC dominance index will suit ...

Long-term chart and wave analysis

Cryptocurrency trader @ Anbessa100 shared on Twitter a chart of the bitcoin dominance index, according to which the index is expected to fall to 58%.

BTCD has been growing since the beginning of 2018. This dynamic was unfolding within the Elliott five-wave structure, while the index moved along the upward support line. In September 2019, this phase of the move ended, and the index began to follow the line of downward resistance.

The completion of the upward phase was confirmed by a bearish breakout in February 2020 of the aforementioned upward support line and its subsequent transformation into resistance.

After the completion of the growth phase, the index, most likely, decreased within the framework of the W-X-Y correction. The market is now inside the final Y wave.

Very strong support lies at 62% – BTCD has not traded below it since July 2019.

The projection of the W wavelength onto the Y wave will allow us to set the target in the region of 58%. This level perfectly matches the level indicated in the tweet..

Shorter-term wave analysis shows that the index has completed the first wave and is now expected to rise, as evidenced by the presence of a triple bottom. This could allow the index to go back to 65%, but then it reverses and drops to 58%.

Recall that last month we already talked about the forecast of the leading developer Blockchair, which predicted that the BTC dominance index would no longer be able to recover above 66%.

The MTC dominance index will suit ...

Thus, the BTCD index may make a small short-term rebound, but then resume the decline.

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