From the Grizzlies West Campfire dreamcatcher continue northeast on the trail. Turn right at the fork after reaching Cotorra springs. At the next fork continue straight off the path and the dreamcatcher will be in the tree right in front of you. It stands out as its fuller and thicker than the other trees here.
Finding all 20 dreamcatchers will reveal the location of the Ancient Arrowhead treasure; A unique item that makes Arthur's stamina last twice as long when using the bow.