This week, Bitcoin (BTC) remains king of the cryptocurrency market, gaining market share while altcoins lag behind. The original cryptocurrency briefly soared to $67,800 - a nearly three-month high - before swiftly dropping back to around $65,000 and rising again. At the time of writing on 16 October, BTC was once again nearing the $68,000 mark.

All eyes are on Bitcoin's bouncing price; where will it land? Key psychological levels include its 2021 high of $69,000 and its more recent all-time high of $73,000.

Analysts are pointing to how political developments in the US and the strength of the dollar may shape the crypto landscape in the coming months. As traders eye Bitcoin for potential gains, the broader market remains volatile, with altcoins struggling to keep pace.

Bitcoin's inverse correlation with the dollar index faces pressure ahead of US presidential election

Historically, Bitcoin has exhibited an inverse correlation with the US Dollar Index (DXY), meaning that when the dollar strengthens, Bitcoin tends to weaken. However, this relationship is being tested as the US presidential election nears.

• Political activity: Speculation about potential crypto-friendly policies or regulations from different US presidential candidates has led to greater demand for Bitcoin upside exposure, even as the dollar shows signs of strength.
• Market sentiment: Options trading data from the Chicago Mercantile Exchange (CME) shows a bullish bias for Bitcoin in the next month, with a one-month 25-delta BTC risk reversal of 1.20, indicating optimism despite the dollar's resilience.

In contrast, the most liquid currency pairs, such as EUR/USD, show negative risk reversals, indicating continued dollar strength. Yet, Bitcoin continues to defy the trend, hitting nearly $68,000 this week despite the dollar index holding steady above 103.00.

It's important to note that speculation about the US election is just that: details of significant legislation from either side are lacking, and there are no guarantees. It remains to be seen whether Bitcoin's relationship to the almighty dollar is really set to change or just a temporary anomaly.

Bitcoin dominance hits 3.5-year high, leaving altcoins behind

Bitcoint's market dominance has reached its highest level since April 2021, with its share of the total crypto market surpassing 58.77% on 15 October.

• Market dominance: Bitcoin's dominance coincided with a 10-week high of $67,800, as its price surged, while altcoins remained mostly stagnant or declined.
• Altcoin struggles: While Bitcoin gained 2.5% on the day, altcoins like Solana (SOL) and Cardano (ADA) were largely flat or losing value, with some traders predicting that Bitcoin's dominance will soon reverse.

Majority of Bitcoin holders now in the black

As Bitcoin's price pushed past $67,000, a large portion of short-term holders managed to turn their previously unrealised losses into profits. Data from market analytics firm Into The Cryptoverse shows that only 8.5% of Bitcoin investors were in a losing position when the price was at $66,870 on 16 October. This means that 91.5% of the Bitcoin supply is now in profit.

While more investors moving into profit is a positive sign, it can also indicate an overheated market. Historically, when a large percentage of holders are in profit, it often leads to profit-taking, which can trigger price corrections. As a result, Bitcoin could see pullbacks in the coming days as investors choose to lock in their gains.

$68,000 is the line in the sand

From a technical standpoint, Bitcoin faces significant resistance at $68,000. When the price was last rejected from this point on 29 July, Bitcoin experienced a 27% drop, falling to $49,577. The current price action suggests that bears may once again be defending this level.

• Key levels to watch: Bitcoin bulls need to secure a decisive daily close above $68,000 to sustain the upward momentum. Failure to flip this resistance into support could lead to a price correction, potentially pushing Bitcoin down toward $61,000.
• Sell orders building: Data from CoinGlass shows a growing wall of sell orders accumulating above $68,000, further underscoring the importance of this resistance zone.

Ethereum and altcoins struggle. When's the altcoin season?

Although Bitcoin is currently outperforming altcoins, several market analysts believe this dominance may be temporary. Prominent influencers such as ICT founder Benjamin Cowen, Coach K Crypto, and Moataz Elsayed all predicted that Bitcoin's dominance would peak at around 60% before crashing, heralding the start of an 'altcoin season'.

Ethereum (ETH), often one of the first assets to rally when Bitcoin's dominance wanes, is currently struggling. The ratio of Ethereum to Bitcoin dropped to its lowest level since April 2021, falling below 0.039, indicating that ETH has been underperforming relative to Bitcoin.

Although it made modest gains on Wednesday, Ethereum has yet to gain significant momentum as Bitcoin continues to dominate, suggesting that we may have to wait a little longer for the altcoin season.

Institutional investors continue to back Bitcoin

Bitcoin has recovered from its recent dip, and institutional interest in BTC remains strong. US-based Bitcoin exchange-traded funds (ETFs) saw net inflows of $371 million on 15 October, contributing to a total of more than $1.1 billion in inflows over the past three trading days. Institutional investors' interest in Bitcoin is a key factor in its recent price surge and increased dominance.

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