Bitcoin’s dominance is falling as traders rotate capital into altcoins. This means that there is an ongoing change in momentum.
On-chain indicators like SOPR and Whale-to-Exchange Ratio indicate that whales are preparing to sell.
Major support levels could break if BTC fails to reclaim $122,000, triggering a 12% correction.
A reversal is still possible if BTC bounces off support and bullish momentum returns.
Bitcoin’s latest bull cycle may be nearing its final stages, as multiple technical and on-chain signals are starting to flash red.
While the price hovers around $118,500, capital is rotating out of the flagship asset underneath the surface and into the altcoins. Available data indicates that the market could be gearing up for a change, and possibly, a correction.
Keith Alan, co-founder of Material Indicators, recently shared a chart showing funds moving from Bitcoin and stablecoins into altcoins. This chart was focused on the TOTAL3ES metric (which excludes Bitcoin, Ethereum, and stablecoins), and showed a clear upward trend.
In essence, if this trend continues and breaks the previous high, the top 100 altcoins could reach a combined market cap of $1 trillion.
Alan noted that if we see a “deeper” dip in BTC, especially if it happens toward its former all-time high of around $110,000, such a move could validate a new support level and spark another leg up.
This dip might also cause altcoin profits to rotate back into Bitcoin and could even end the altcoin rally.
While Keith Alan painted a scenario where Bitcoin could win the struggle against the altcoins, another trader Roman, is less optimistic.
According to his analysis of the weekly Bitcoin chart there are signs of investor “exhaustion” in the form of bearish divergences on major indicators like the RSI and MACD.
More importantly, he pointed out the low trading volume at Bitcoin’s recent all-time highs, which is often a sign of waning buyer interest.
In his view, Bitcoin’s falling dominance and the altcoin surge that came after, strongly indicate that liquidity is moving out of BTC.
“The bull run is likely close to over,” Roman warned, advising traders to take advantage of altcoins while the trend continues.
More than charts and trendlines, on-chain data further supports this bear case. One important metric to look at is the Long-Term Holder Spent Output Profit Ratio (SOPR), which measures the profits taken by investors who have held Bitcoin for more than 155 days.
As of July 21, the SOPR was at 1.96, which indicates that these holders are selling their coins for nearly double the price they paid. While this doesn’t always trigger an immediate correction, history shows that high SOPR levels often come before sharp price drops.
Bitcoin’s current SOPR ratio | Source: CryptoQuant
For instance on February 9, SOPR hit 5.77 and BTC fell from $96,479 to $84,365 (dropping by 12.5%).
The same happened on June 13, when a 3.47 SOPR reading was followed by a 4.8% dip. It happened again on July 9, July 13 and July 21, where the SOPR hovered between 3.25 and 3.90.
The most intense spike came on July 4, when SOPR shot past 24, although the market didn’t immediately respond.
Put simply, this delay could mean a correction is overdue.
On the technical side, Bitcoin has been clinging to the $116,456 support zone, which is a level that aligns with the 0.236 Fibonacci retracement from the recent move between $98,230 and the $122,100 high.
This support has been held since mid-July. However, consistent pressure could cause it to break.
If that happens, the next major support sits at $107,300, near the 0.618 Fibonacci retracement. This level is often considered a golden pocket for reversals, and a failure at this level would open the door to deeper corrections.
Bitcoin and its Fibonacci retracement levels | Source: TradingView
If $107,343 fails, then the next support sits at $103,300. If Bitcoin indeed drops towards this level, this would stand as a 12% drop from current prices.
However, there’s still hope for bulls. A strong rebound above $122,000 could invalidate the bearish setup. If Bitcoin pushes beyond its previous all-time high and on-chain metrics cool down, it could restore bullish sentiment.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.