ETH Extreme Weakness - A Warning Sign
Since my last update on this chart, Ethereum has broken its long term uptrend and dropped almost 40% in value. This was back in May of this year: 
Zoomed out, you can see the failed long term trendline. Obviously, a break back above it would be a bullish sign, but there's a long way to go, as it's currently around $4,000.
Right now, it rests on its 200 and 100 weekly moving averages (teal and yellow on my chart). There really isn't much support below here at all until previous bear market lows, near $1,000. In contrast, Bitcoin has a long way to fall before arriving in the same position. This is not unlike the previous cycle, where ETH bled significantly on its ratio against Bitcoin. For crypto bulls, this may be a good sign. However, there is still plenty to fall on the ETH/BTC ratio after making a macro lower high:
There is no support on the ETH/BTC chart until lows not seen since 2020. It doesn't bode well for the #2 cryptocurrency, as it was unable to make a new high against Bitcoin. This means it is unlikely to outperform again on longer timeframes. This isn't a great look either, given the new ETH ETF's. I have no intention of buying ETH again, after making significant profit from 2018-2021 (buying around $100 and selling near $3,000). Can't complain about those gains at all, especially as its price hasn't managed to really hold above that price point this time around. On the bullish side (in the short term) if price continues to hold here, there could be a corrective wave up towards the 50 week MA near $2,800 (red).
As for Bitcoin itself, the 200 week MA is a little below 40k at present. Let's see if price can break down from the current support at the 50 week MA (red). If support continues to be held here, it is likely to hold for ETH as well.
Now, what about this rate cut tomorrow from the U.S. Federal Reserve? Given retail sales and the apparent strength of the economy, it seems fairly likely that 25 bps will be the decision. Now, investors and other market participants are quire wary of other economic data, which could easily signify a recession. Markets have been volatile in recent weeks. The Fed must tread carefully. If they cut by 50, it could signal to investors that they tightened too far, and are taking greater steps to curtail a recession. This might spook the market. My guess is that even with the 25 expected bps, the market will have the same lackluster reaction, particularly as it's not a meaningful rate reduction. Either way, I don't think the market will be pleasantly surprised enough to cause a significant bump up, essentially making tomorrow a "sell the news" event.
We'll see though! Perhaps it really is that simple: rate cuts=more liquidity for a pump.
This is meant for speculation only! Thanks for reading.
-Victor Cobra
Zoomed out, you can see the failed long term trendline. Obviously, a break back above it would be a bullish sign, but there's a long way to go, as it's currently around $4,000.
Right now, it rests on its 200 and 100 weekly moving averages (teal and yellow on my chart). There really isn't much support below here at all until previous bear market lows, near $1,000. In contrast, Bitcoin has a long way to fall before arriving in the same position. This is not unlike the previous cycle, where ETH bled significantly on its ratio against Bitcoin. For crypto bulls, this may be a good sign. However, there is still plenty to fall on the ETH/BTC ratio after making a macro lower high:
There is no support on the ETH/BTC chart until lows not seen since 2020. It doesn't bode well for the #2 cryptocurrency, as it was unable to make a new high against Bitcoin. This means it is unlikely to outperform again on longer timeframes. This isn't a great look either, given the new ETH ETF's. I have no intention of buying ETH again, after making significant profit from 2018-2021 (buying around $100 and selling near $3,000). Can't complain about those gains at all, especially as its price hasn't managed to really hold above that price point this time around. On the bullish side (in the short term) if price continues to hold here, there could be a corrective wave up towards the 50 week MA near $2,800 (red).
As for Bitcoin itself, the 200 week MA is a little below 40k at present. Let's see if price can break down from the current support at the 50 week MA (red). If support continues to be held here, it is likely to hold for ETH as well.
Now, what about this rate cut tomorrow from the U.S. Federal Reserve? Given retail sales and the apparent strength of the economy, it seems fairly likely that 25 bps will be the decision. Now, investors and other market participants are quire wary of other economic data, which could easily signify a recession. Markets have been volatile in recent weeks. The Fed must tread carefully. If they cut by 50, it could signal to investors that they tightened too far, and are taking greater steps to curtail a recession. This might spook the market. My guess is that even with the 25 expected bps, the market will have the same lackluster reaction, particularly as it's not a meaningful rate reduction. Either way, I don't think the market will be pleasantly surprised enough to cause a significant bump up, essentially making tomorrow a "sell the news" event.
We'll see though! Perhaps it really is that simple: rate cuts=more liquidity for a pump.
This is meant for speculation only! Thanks for reading.
-Victor Cobra
Note
The rate cut produced a rally after all - it really was that easy and I was probably overthinking it. Still, the economy is treading along a thin line. Debt matters, and how people handle that debt in the coming year will probably determine the broader direction for the market.
And so far, another bounce off these major weekly MA's. Price really needs to get above the 50 (red) in order to solidify a bottom.
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