Ethereum Dominance (ETH.D) Bounces After All-Time Low
Ethereum Summer is in full swing – according to the Ethereum dominance chart (ETH.D, TradingView). On April 21 of this year, ETH.D hit an all-time low of 6.95%. Since then, it’s been sunshine and blue skies, with the metric trading at over 11% today.
What is Ethereum dominance?
Ethereum dominance (ETH.D) shows how much of the total crypto market belongs to Ethereum. When it rises, Ethereum is gaining market share compared to bitcoin and altcoins. You can track it on TradingView using the ETH.D chart. A rising dominance often means Ethereum is leading the rally. But it could also mean ETH is going down less than the rest of the crypto market.
Ethereum dominance bounced on long-term support at the start of the summer (if you live in the Northern hemisphere). Prices tend to bounce on support – at least on the first pass. It’s kind of a self-fulfilling prophecy: traders watch big support levels, so they buy when the reaches them. And even though Ethereum dominance isn’t an investment they can buy, they still watch it.
ETH.D also made a slightly lower low in April (6.95%) than in September 2019 (7.09%). And it’s nearly doubled in the past three months.
What could this mean for Ethereum and the crypto market?
Ethereum spot ETFs (exchange-traded funds) have soaked up investment this summer. The next chart from The Block shows the money flowing in or out of these ETFs over the past year, measured in ETH. Notice the jump in ETH held by these funds in July (blue oval).
This rise in ETF inflows makes sense: the ETH price is rallying, and investors want in. When they buy shares in these ETFs, the funds must buy and hold real ether to back those shares.
In crypto, many investors call “altseason” when Ethereum starts running. But if Ethereum dominance is rising, that’s technically an Ethereum summer – more than an altcoin one. That said, the TOTAL 3 chart broke out of a giant wedge pattern in early July. Total 3 excludes bitcoin and Ethereum from the mix, so altcoins are generally doing well, too.
As for the ETHUSD chart, it’s up almost 150% since March. There’s a resistance box around the $4,000 zone. Plenty of traders will be watching that too – just like they watch support. So while the price could still rip higher, it may not be the safest time to FOMO in.
If it were me, I’d wait and see if that resistance breaks – and look to buy ETH if it flips into support.
As usual, none of this is investment advice. To learn more about trading support and resistance, grab our free PDF guide below:
