Bitcoin is currently trading around $96,000, showing little volatility over the past 24 hours. Meanwhile, Bitcoin Dominance (BTC.D) is forming a bearish divergence, signaling a weakening market share of Bitcoin relative to the total cryptocurrency market capitalization.
However, the Relative Strength Index (RSI) has yet to issue a sell signal, indicating that momentum has not fully shifted to a bearish trend.
BTC.D surged 5% in early February after the market tumbled due to Trump’s tariff stance, wiping out over $420 billion from the crypto market cap. As panic spread, Bitcoin held its ground while altcoins collapsed, with most high-cap altcoins hitting new lows against BTC.
Historically, periods of Bitcoin consolidation have often triggered altcoin rallies. In Q2 last year, when BTC fluctuated between $60,000 and $70,000, Ethereum posted its largest daily green candle, soaring 19% in a single day.
With high-cap altcoins already showing gains this week, a similar trend may be unfolding. Futures traders should exercise caution as bullish sentiment rises, with an increasing number of leveraged long positions.
However, the ongoing bearish divergence suggests billions of dollars could be at risk of liquidation in the coming days, potentially setting the stage for a sharp price correction.
This February, Bitcoin has shed over $1 trillion in market capitalization, dropping from a peak of $2.1 trillion at the end of January. As market sentiment sinks into fear, the likelihood of a BTC recovery remains distant.
If Bitcoin dominance declines further, we could see the Fear & Greed Index plunge into “extreme fear” territory, increasing the risk of panic selling. This will be a critical factor to watch in the coming days.
For now, the market is seeing a slight uptick, with momentum remaining neutral. RSI has not fully flipped bearish, leaving room for a potential reversal.
However, to prevent RSI from hitting lower levels, closely monitoring the futures market is essential, as it poses the greatest threat to Bitcoin’s dominance.
