What was expected so long, finally happened. Bitcoin managed to break through the $ 10,000, dragging other crypto market participants to the upside; and consequently, generating a significant increase in market capitalization.
As we repeatedly commented, Bitcoin remained strong, avoiding losses that will generate a significant change in sentiment.
The bulls always remained in command. As a consequence, the long-awaited bullish escape happened.
Although it is not usually very common, some altcoins were ahead of BTC, throwing great positivity into the ecosystem, which led to the crypto market today having a capitalization of $ 352,926,903,389, thus exceeding the maximums reached in February.
But, is everything as good as it seems ?, because as always, not everything is pink, and despite the fact that it is indeed a great stage what we are witnessing. There is something that is not so good.
Volume divergence and crypto market capitalization
While the capitalization of the crypto market is going far, the volume not so much, it has even been decreasing since the great fall in the markets that occurred last March.
It is entirely normal for this to happen, since when prices drop, weak hands tend to quickly despair, and they bring all their coins to exchanges to get rid of them as quickly as possible.
On the other hand, the biggest ones are not that they stay on the ship, and they are the ones that make what supports get lost quickly.
When prices begin to drop so sharply, large blocks of orders are liquidating, generally at those levels we call psychological, creating a perfect tide for volume to soar.
The purchases on their part, are more sensible, when the prices are low.
Institutionals strategically add positions, without making too much noise, allowing natural behavior to confirm the validity of the decision.
Small capitals are watching the price increase, and an upward trend begins to develop, which leads them to think that it is a good time to get on the boat.
But it is not until too expensive, at that moment when all the news talk about it, when most want to take advantage of the situation, with decisions guided by euphoria and greed, and it is there where the volume increases hard.
So what is wrong with what you are seeing?
As much as it is normal, it is more than clear that a divergence in bearish volume and bullish capitalization is a negative signal, but how much ?.
With an increase in prices as we are currently seeing, the volume should start to grow more than soonOtherwise, some abrupt downward movement could quickly engulf the bullish intention of several days, and generate a rather negative scenario.
We are still in time for a natural increase in volume to begin, possibly driven by the euphoria generated by high prices.
At the micro level, it is indeed a major divergence, but it may be no more than a sign that a pullback should start soon.
If we look at the big picture, we have a pretty solid ecosystem, with a volume that has been growing strongly, despite the fact that we are quite far from the historical maximums of the capitalization of the crypto market, achieved in early 2018, showing that adoption is increasing, this being the most important thing.
Bitcoin dominance decreases
As the crypto market capitalization has been increasing, Bitcoin has lost a bit of relevance.
Altcoins are picking up steam, some generating extremely higher profits than the largest is giving.
Today the dominance of BTC is 60.94%, which means a decrease of 10%, if we compare it with the closest maximum, reached in September 2019.
This causes a decrease in the influence of Bitcoin on the behavior of the other participants; however, it will still remain a great force for a long time.
For its part, Ethereum gains a little ground, and increases its dominance towards 11.48%. Ripple up to 3.21% and Tether to 3.33%.
And what do you think about the current bullish behavior of the crypto market and its capitalization? Let us know your opinion in the comments!