From the Loft dreamcatcher head off trail southeast down the hill. There's a narrow spot that is not too steep to go down with the edge of the cliff on your left side. Once you reach the railroad tracks at the bottom there's a canyon on your right that the railroad tracks go through, by the edge of the steep rock face is a path down to the next level. Once down ride southeast to the path and then follow it east until you cross the river. After you cross the river the tree with the dreamcatcher is directly to the north just off the trail.
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.