Bitcoin’s recent surge of 10% has shifted crypto investors’ sentiment from bearish to bullish. However, this positive momentum may be at risk due to stablecoin dominance. Consequently, those invested in BTC should proceed with caution as the upward trend could potentially reverse.
The rise in Bitcoin’s price starting on September 6 led to a 10% increase, reaching $58,129 from $52,500, which altered the crypto market sentiment to cautiously optimistic. Although the current outlook seems bullish, the growing stablecoin dominance since Bitcoin’s all-time high in March 2024 suggests a need for vigilance, considering the overall bearish trend of BTC.
Stablecoin dominance indicates the stablecoin market capitalization relative to the total cryptocurrency market capitalization. Data from Alphractal indicates that the bull run in Bitcoin’s price coincided with a decline in stablecoin dominance between June 2023 and early 2024. The recent uptick in this metric may suggest that the downtrend has not yet concluded.
An increase in stablecoin dominance suggests a rise in stablecoin market capitalization compared to other cryptocurrencies, reflecting a risk-averse attitude among investors. Failure for this metric to decrease in the upcoming weeks could potentially undo the current uptrend.
The short-term BTC price outlook appears bullish following the recent rally, yet a six-month downtrend consolidation shows a pattern of lower highs and lower lows. To reignite the ongoing bull run, Bitcoin must surpass the $65,000 level by producing a higher high. Without overcoming the resistance zone of $63,000 to $65,000, the short-term bullish outlook remains uncertain.
Indicators like the Relative Strength Index (RSI) and the Awesome Oscillator (AO) suggest a momentum shift favoring bulls. However, stabilization above their mean levels is essential for a recovery rally. Short-term rallies in the past six months have promptly resulted in sell-offs, emphasizing the importance of sustained buying pressure to prevent a bearish market sentiment.
Overall, the Bitcoin price prediction leans cautiously optimistic but with a downside bias. A breakdown below the $54,000 level on the daily time frame could nullify the short-term bullish thesis, potentially leading BTC to the support zone ranging from $52,271 to $50,710.