Bitcoin (BTC) has shown some signs of strength lately and we have seen the price climb above $9k the past few days. This is not surprising because for weeks now we have been talking about a potential bull trap before the next major downtrend. The 1H chart for BTC/USD shows that the price is quite likely to end up testing $10k before it starts to decline. To the majority of the market, this is the beginning of a new bullish cycle. I am inclined to believe this is one of the biggest bull traps in years and we are likely to see the price decline not only to $6k or $3k but far below that.

The price has yet to complete the ongoing correction. The parabolic rally that we saw in 2019 has yet to be followed by a correction for us to see a reversion to the mean. This is not a point to be bullish but those that have been bullish since lower levels may want to wait and see how the price reacts in the days ahead. If we see a decline below the 200-day moving average, that will be our cue to get out of the market completely and look for bearish entries. It is important to realize that this is not a time to be looking for either bullish or bearish entries. Turning points like these are only traded by amateur traders because it is easier to trap such inexperienced traders as people tend to make a wish at a turning point.

Successful traders in any market wait for confirmation. Unless you are a whale or a market maker, there is no way to know which way the market will swing. It is therefore futile to be betting on an outcome without waiting for confirmation. We are now seeing Bitcoin dominance (BTC.D) facing some resistance at the 67.98% level but it will soon have to make a decisive move. If it declines below the ascending triangle with follow through, we could see a 2017 styled altcoin season.

However, if the ascending triangle breaks to the upside as most ascending triangles do, we are likely to see one of the most devastating crashes in the cryptocurrency market. A rising Bitcoin dominance spells trouble for the cryptocurrency market and that is what we will see in case we see Bitcoin dominance rise past 70% to shoot for higher levels. Please not that in such a case the decline would not be similar to what we have previously seen. It would mean the opposite of what happened in 2017 and therefore the altcoin market could see some serious pain which will likely last for a long time before the next potential bullish cycle begins.