ETH/BTC
The crypto markets have had their own little rally led primarily by ETH, which pulled close to its June and July highs while BTC has remained a few percentage points behind.
There don’t seem to be any specific drivers of the sudden move - perhaps just a short squeeze that caught ETH bears offside, or perhaps participants getting excited about the Merge which is supposedly scheduled for mid-September.
This dynamic can be seen in the ETH / BTC chart which I'll break down and welcome comments or additions from those of you who get across these types of scenarios.
What is ETH / BTC?
Pairs are basically the relative value between two compared currencies - case and point, ETH/BTC.
To state the obvious, ETH is the ticker for Ether and BTC for Bitcoin... we're on the same page. If you have looked any exchange platform, be it crypto or forex etc. you'll see a broad range of tradable pairs.
Another example, take Japanese Yen and U.S. dollar, JPY and USD. On a given exchange platform you'll see JPY/USD pair available for trade. Pair ETH/BTC or JPY/USD and you get the represented ratio between the two currencies. In ETH/BTC, for example, the current value is equal to 0.058....
This effectively means that 1 ETH is worth 0.058 BTC, or just shy of 6% of the value of BTC and if you want to buy one ETH, you need 0.0058BTC. This relationship stands the same for all pairs.
What the current ETH / BTC chart tells us is that in the past day, ETH's value relative to BTC's increased by over 5%. If you were to apply technical analysis to the chart as you might any other tradable product, you could expect a re-test of local resistance of 0.065 - 11% up from where we are now. Were this move to fail, there are also compelling reasons to consider a significant move down to a longer-term trend established in 2016 and re-affirmed in 2019 / 2020. Not only is it critical to consider 'what if' scenarios of a failed trade, it's crucial to maintain bigger picture context of what drives the trade.
While not financial advice (some technical analysis is as inconsistent as mediocre tea-reading when misapplied), it's interesting to note that these types are observations provide edge for lots of different kinds of trades - particularly, pair traders would be all over a simple trade such as long ETH and short BTC in a scenario like this - as long as the thesis plays out.
Again, there are lots of ways to go about it and there are many more subtle nuances, correlations, and even multi-pair trades that take the subject many layers deeper.
Noted that the chart is formatted in the daily timeframe with a range dating back to January 2017. Further, 50, 200, and 800 exponential moving averages are included, as is relative volume. While not a huge fan of any single indicator or strict use of trend lines, I appreciate where convergence tells a story.
There don’t seem to be any specific drivers of the sudden move - perhaps just a short squeeze that caught ETH bears offside, or perhaps participants getting excited about the Merge which is supposedly scheduled for mid-September.
This dynamic can be seen in the ETH / BTC chart which I'll break down and welcome comments or additions from those of you who get across these types of scenarios.
What is ETH / BTC?
Pairs are basically the relative value between two compared currencies - case and point, ETH/BTC.
To state the obvious, ETH is the ticker for Ether and BTC for Bitcoin... we're on the same page. If you have looked any exchange platform, be it crypto or forex etc. you'll see a broad range of tradable pairs.
Another example, take Japanese Yen and U.S. dollar, JPY and USD. On a given exchange platform you'll see JPY/USD pair available for trade. Pair ETH/BTC or JPY/USD and you get the represented ratio between the two currencies. In ETH/BTC, for example, the current value is equal to 0.058....
This effectively means that 1 ETH is worth 0.058 BTC, or just shy of 6% of the value of BTC and if you want to buy one ETH, you need 0.0058BTC. This relationship stands the same for all pairs.
What the current ETH / BTC chart tells us is that in the past day, ETH's value relative to BTC's increased by over 5%. If you were to apply technical analysis to the chart as you might any other tradable product, you could expect a re-test of local resistance of 0.065 - 11% up from where we are now. Were this move to fail, there are also compelling reasons to consider a significant move down to a longer-term trend established in 2016 and re-affirmed in 2019 / 2020. Not only is it critical to consider 'what if' scenarios of a failed trade, it's crucial to maintain bigger picture context of what drives the trade.
While not financial advice (some technical analysis is as inconsistent as mediocre tea-reading when misapplied), it's interesting to note that these types are observations provide edge for lots of different kinds of trades - particularly, pair traders would be all over a simple trade such as long ETH and short BTC in a scenario like this - as long as the thesis plays out.
Again, there are lots of ways to go about it and there are many more subtle nuances, correlations, and even multi-pair trades that take the subject many layers deeper.
Noted that the chart is formatted in the daily timeframe with a range dating back to January 2017. Further, 50, 200, and 800 exponential moving averages are included, as is relative volume. While not a huge fan of any single indicator or strict use of trend lines, I appreciate where convergence tells a story.
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