Technical analysis is issuing some warning signals for altcoin bulls, with the Ether to Bitcoin (ETH/BTC) ratio falling below support levels and on the verge of falling into an ominous death cross technical pattern. be. The options market shows investors are taking cues.
A death cross occurs when the short-term moving average falls below the long-term moving average, indicating a potential long-term bearish shift in momentum.
The ratio's 50-week simple moving average (SMA) appears to be on track to drop below the 200-week SMA, according to charting platform TradingView. The impending death cross suggests de-risking or long-term underperformance of Ether (ETH) and other altcoins compared to Bitcoin (BTC).
Since 2017, the cryptocurrency market has oscillated between a Bitcoin-dominated regime and an altcoin-dominated regime. More importantly, altcoin leadership is characterized by a rising ETH/BTC ratio. In other words, traders are willing to take more risk if Ether outperforms Bitcoin or vice versa.
According to TradingView data, the ETH/BTC ratio has fallen by nearly 10% this year to 0.048.
“ETHBTC cross is testing a key support level after falling below 0.05,” Singapore-based QCP Capital said in a market note on Friday. “There continues to be a massive sell-off of ETH calls, resulting in [volatility] It also puts downward pressure on prices.This may also be a very early sign [bullish] FOMO is turning into fear as a substitute for alternatives in ETH. ”
The current pricing of Bitcoin and Ether options on Deribit, a major derivatives exchange, also indicates that Ether is expected to underperform in the short term.
At the time of writing, Ether puts expire in seven days and trade at a premium of 5%, 3%, and 0.3% to calls, respectively, in one and two months. A put option gives the buyer the right, but not the obligation, to sell the underlying asset at a specified price at a later date. Because a call option gives you the right to buy, the premium on a put, which provides protection against a decline in price, indicates a bearish outlook.
In the case of Bitcoin, the bias was in calls over expiry excluding 7-day options.
