Analysts expect a slow Q4 for Bitcoin and altcoins, especially as BTC’s dominance rate begins to move higher.
Bitcoin (BTC) price has been stuck below $11,000 for weeks now but users generally expect a slow fourth quarter for the top-ranked digital asset.
In 2018 and 2019 Q4 closed net negative, injecting a bit of bearish sentiment into the market. In the short term, a boring Q4 of further downside from Bitcoin price could cause altcoin prices to dump further.
Now multiple technical analysts are closely watching the bounce in the Bitcoin dominance index to warn against an altcoin market pullback.
Has the worst already passed for altcoins?
Over the past two weeks most of small altcoins and decentralized finance (DeFi) tokens fell by 30% to 60%.
The slump in altcoins worsened when Bitcoin increased from $9,981 to $11,179 on Sept. 9 to Sept. 19 and during this period it seems that a take-profit rally happened. Analysts think that profits from altcoins and DeFi cycled into Bitcoin and stablecoins.
As such, while Bitcoin saw a strong uptrend, DeFi tokens fell and altcoins remained in a steady decline.
The altcoin sell-off occurred as Bitcoin started to decline after rejecting from a key resistance level at $11,100. In the last 15 days, Bitcoin has slipped by nearly 6%, stabilizing slightly above $10,500.
According to analyst Michael van de Poppe, the current slump is probably going to last.
van de Poppe tweeted that crypto markets typically see slow, ‘boring and corrective’ phases for Bitcoin during Q4. The traders said, historically Ether bottoms in December and begins to move by the next quarter.
Van de Poppe suggested that “BTC dominance will run up, to have an altseason in Q1 20201.”
A pseudonymous trader known as “Loma” has a similar sentiment. He said the last time altcoins plunged this hard, BTC saw a large drop in a short period.
This time, altcoins are declining while BTC and Ether remain stable above their support levels. The trader said:
“ALTs dumping right now while Bitcoin barely moving. Last time I saw that, Bitcoin painted a fat down candle.”
Is a relief rally on the cards?
Since the start of October, the crypto market has seen some negative events which could be weighing on investor sentiment.
On Sept. 26 KuCoin exchange was hacked for $281 million and while BTC price did not correct over the news, but it could be preventing the bullish momentum. This was followed by the U.S. Commodities Futures Trading Commission (CFTC) announcing that it had charged BitMEX with violating the Bank Secrecy Act on Oct. 1.
Then, on Oct. 2, U.S. President Donald Trump tested positive for coronavirus, causing a stir in both traditional and crypto markets.
After these major events analysts expect increased volatility and some traders have suggested that a short squeeze could be on the cards.
Another popular crypto-Twitter trader known as “Byzantine General” said now is the “perfect” moment for a short squeeze as it would shake out the weak hands. The trader also said that in his opinion, there is plenty of capital on the sidelines within the cryptocurrency market. He said:
“With all the uncertainty going on right now, especially in crypto, it would be the perfect moment to blast up and leave all the weak hands behind. BTW the SSR is still historically low, meaning that there is a lot of dry powder on the side lines.”
Overall, traders foresee a slow Q4 ahead for Bitcoin and altcoins, but last month’s intense sell-off could finally lead to a strong relief rally.