Altcoins
Ether-Bitcoin Ratio Is About to Flash Death Cross
Technical analysis sends several warning signals to alternative cryptocurrency (altcoin) bulls, with the ether-to-bitcoin (ETH/BTC) ratio falling below a support level and on the verge of falling into a technical pattern disturbing death cross. The options market shows that investors understand.
A deadly crossover occurs when a short-term moving average falls below the long-term moving average, signaling a potential shift in long-term bearish momentum.
The ratio’s 50-week simple moving average (SMA) appears poised to move below the 200-week SMA, according to charting platform TradingView. The Near Death Cross Signals Risk Aversion or Prolonged Ether Underperformance (ETH) and other altcoins compared to bitcoin (BTC).
Since 2017, the crypto market has oscillated between bitcoin-led and altcoin-led regimes. More importantly, altcoin leadership was characterized by an increase in the ETH/BTC ratio. In other words, traders are willing to take more risks when ether outperforms bitcoin and vice versa.
The ETH/BTC ratio has fallen almost 10% to 0.048 this year, according to TradingView data.
“ETHBTC crossover is testing a critical support level after falling below 0.05,” Singapore-based QCP Capital said in a market note on Friday. “There was a massive and persistent sell-off in ETH calls that crushed [volatility] and also put some downward pressure on prices. Could this again be a very early sign of [bullish] FOMO turns into fear in ETH as proxy for alts. »
The way Bitcoin and Ether options are currently priced on Deribit, the leading derivatives exchange, also points to Ether underperformance in the near term.
At press time, ether call options expiring in seven days, one, and two months were trading at premiums of 5%, 3%, and 0.3%, respectively, to the calls. A put option gives the buyer the right, but not the obligation, to later sell the underlying asset at a predetermined price. A call option gives the right to buy, so the premium for puts – which offer protection against a decline in price – indicates a bearish outlook.
In the case of bitcoin, preference was given to calls on all maturities, excluding seven-day options.