While Bitcoin started October with optimism, the price has already fallen from $66,000 to under $60,000 within the first few days of the month. Despite the previous three-week upward trend, the current bearish signal may lead to a longer period of consolidation before any recovery.

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On Sept. 27, Bitcoin closed above its previous local high, marking a bullish shift in market structure. Typically, after forming a higher high, it’s normal for prices to create a higher low before continuing upward. Right now, Bitcoin is bouncing within a demand zone between $60,500 and $57,400, which aligns with key Fibonacci retracement levels (0.50-0.618), often called the “golden zone.” This is where many traders look to build longer-term positions.

However, Bitcoin is struggling to break above the 200-day EMA, which means the price may drop below $60,000 in the coming days. Independent analyst Dentoshi suggests that losing the 4-hour 200 EMA could result in further price volatility, with a potential dip to $57,400 at the lower end of the golden zone.

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At the time of writing, Bitcoin is trading at $63,200, reflecting an 11% monthly decline, the first since August 2023. This downturn is attributed to various factors, including reduced demand for U.S.-based spot bitcoin exchange-traded funds (ETFs) and general risk aversion in financial markets. Nevertheless, Bitcoin’s dominance rate, which measures its share in the overall cryptocurrency market, has surged past a critical level, signaling potential upside.

Several factors are contributing to Bitcoin‘s resilience and potential dominance. The continued expansion of prominent stablecoins provides support, while analysts are closely monitoring the U.S. Treasury’s quarterly refunding statement, expected on May 1. Higher issuance of short-term U.S. bills could release liquidity, potentially benefiting risk assets like Bitcoin.

The U.S. Treasury’s announcement of plans to borrow more in the April to June quarter suggests increased bond supply and higher yields, which could diminish the appeal of risky assets. However, Bitcoin’s dominance rate recently reached a three-year high of 57%, breaking out from a six-month consolidation pattern. This breakout indicates that Bitcoin may continue to outperform alternative cryptocurrencies (altcoins) in the coming months.

Fairlead Strategies noted that Bitcoin’s dominance breakout favors it over altcoins in the intermediate term, aligning with the weekly relative rotation graph (RRG), where most altcoins are trending lower. This shift marks a continuation of a long-term trend, reversing much of the gains that altcoins experienced in early 2021.

Despite the potential for Bitcoin to experience its first monthly loss in nearly eight months, its increasing dominance in the cryptocurrency market suggests that it remains a focal point for investors, positioning it for continued strength in the future.

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