On the weekly chart, the ETH/BTC ratio is about to enter a death cross. If Ether continues to underperform, it may indicate that investors are becoming risk averse and are showing less interest in other cryptocurrencies.
The ether-bitcoin (ETH/BTC) ratio has fallen below a support level and is about to enter a frightening death-cross technical pattern, whereby technical analysis is sending several warning signs to altcoin bulls. A look at the options market reveals that investors are getting the message.
When the short-term moving average falls below the long-term moving average, it indicates a possible long-term negative change in momentum, which is known as a death cross.
Based on the data provided by TradingView, the 50-week simple moving average (SMA) of the ratio is expected to dip below the 200-week SMA quite soon. The imminent death cross indicates that ether (ETH) and other cryptocurrencies are not willing to take risks or have been underperforming compared to bitcoin (BTC) for a long time.
In the cryptocurrency market, dominance of bitcoin and altcoins has been in a constant state of flux since 2017. Even more crucially, a rising ETH/BTC ratio has been a hallmark of altcoin leadership. If ether is doing better than bitcoin, traders will take greater risks, and if bitcoin is doing worse, the opposite is true.
According to TradingView's data, the ETH/BTC ratio has decreased by roughly 10% to 0.048 this year.
"The ETHBTC cross is testing a critical support level after breaking below 0.05," stated QCP Capital, a market note from Singapore, on Friday. Consistently high volumes of ETH call sales have squashed volatility and placed some downward pressure on price. Might this be another early warning sign of [bullish] FOMO giving way to anxiety in Ethereum (ETH) relative to altcoins?
Deribit, the top derivatives market, is pricing bitcoin and ether options in a way that suggests ether will likely underperform in the near future.
As of this writing, the premiums for ether puts with a seven-day, one-month, and two-month expiration date compared to calls were 5%, 3%, and 0.3%, respectively. The buyer of a put option has the permission, but not the duty, to sell the underlying asset at a future date and price that has already been decided upon. The premium for puts, which offer insurance against a price decrease, suggests a gloomy outlook, whereas call options allow the right to buy.
View for more updates