Bitcoin Price Hits Two-Month High as Dominance Rate Spikes

CoinMarketCap's bitcoin dominance rate, an indicator that tracks the percent of the total cryptocurrency market capitalization contributed by the leading cryptocurrency, rose to 46 percent today - the highest level since December 20, adding credence to BTC's 20 percent rally seen in the last seven days.

To start with, a rise in the BTC dominance rate essentially means the premiere cryptocurrency is more in demand compared to the alternative cryptocurrencies.

The BTC dominance rate has increased from 40.5 percent to 46 percent in the last four weeks.

During the same time period, BTC has rallied from $5,755 to $7,820, according to Bitfinex.

The fact that the BTC price rally from the seven-month lows below $6,000 is accompanied by the sharp rise in the dominance rate indicates the bargain hunters are likely betting on further sustainable gains in BTC prices and are not buying BTC to venture into alternative cryptocurrencies.

In the latter case, the dominance rate of alternative cryptocurrencies over bitcoin rises sharply.

A sharp rise in the BTC dominance rate, as seen in the last four weeks, could be considered a sign of investor confidence in the current BTC price rally.

BTC could soon find acceptance above the key 100-day moving average hurdle and cross the $8,000 mark in a convincing manner.

BTC is stuck in a broadening wedge - a continuation pattern, meaning an upside break would revive the rally from the July 17 low of $6,740 and open up upside towards the next major resistance located at $8,720.

View A spike in the BTC dominance rate validates the short-term bullish outlook.