Ethereum Will Now Outperform

What The Data Says When ETHBTC Gets Smoked

REKTelligence

Oct 10, 2023

IN TODAY’S REPORT

What we cover: ETHBTC’s weak performance defined. Implications for ETH.

TODAY’S STATS

Chartists Are Rarely Objective

ETH/BTC just got smoked.

Down for days and pounded in Monday’s session, the most important ratio in all of crypto looks ugly. Time to dump Ethereum for Bitcoin? More than a few well-known analysts would say yes.

But chartists are rarely objective. I’ve been one for more than a couple decades, so I should know. It wasn’t until I pivoted to be primarily stats-driven, however, that chart setups became measurable, probability drove decision-making, and objectivity emerged as a new reality.

Today we’ll define the current ETH/BTC setup, query the data and see what the hell it says about this late 2023 see-saw market.

`ETHEREUM/BITCOIN (ETH/BTC). Daily Chart with Bollinger bands and RSI(14).`

To take a closer look at the future implications of the current setup, we’ll run a simple test over all of ETH/BTC’s history from inception to the present. Our “query conditions” represent a basic definition of the technical state of ETH/BTC. The simpler the conditions the more data points we get to consider.

First, our simple query conditions below:

ETH/BTC SETUP CONDITIONS

CONDITION 1: ETH/BTC closes lower by 2.00% or more
CONDITION 2: ETH/BTC closes below its lower Bollinger band
CONDITION 3: ETH/BTC's RSI(14) closes below 25


ENTRY AND EXIT CONDITIONS:

1. ENTRY CONDITION: Enter long ("buy") at the open of the next candle
2. EXIT CONDITION: Exit ("sell") N-days later

When we run our test over ETHBTC’s historical data, we get these results using a variety of hold times. For those new to our work, here’s a quick guide:

Win %: This shows the percentage of hypothetical trades which were profitable when exited “N-Days” later. For example, if someone bought ETH/BTC each time all today’s query conditions were met in the past and exited 60 days later, Win % shows how many of those trades with have been profitable.
Average Trade %: Shows the average trade result for various hypothetical hold times (i.e., for a 30-day hold, 60-day hold, 90-day hold, 180-day hold, and a 365-day hold).

`ETHEREUM/BITCOIN (ETH/BTC). Average Trade Over Various Hold Times. Inception-Now.`

Across all hold times, average trade results for ETH/BTC are positive with only one exception — a 60-day hold. Average trade results remain relatively similar through 90 days. With a 180-day exit however, the average trade jumps massively to +190.7%. One year hold? Even better at +250.2%.

Exit 7 days later? +7.4% average trade
Exit 15 days later? +9.4% average trade
Exit 30 days later? +17.6% average trade
Exit 60 days later? -0.6% average trade
Exit 90 days later? +18.8% average trade
Exit 180 days later? +190.7% average trade
Exit 365 days later? +250.2% average trade

The Win % here provides the nuance. All hold times through 30 days have a positive average trade but winning percentages mostly under 50%. Therefore we can expect mixed performance in the short-term. More specifically, odds are for ETH/BTC weakness over short-term hold times, but nevertheless a positive expectation.

What’s the upshot? Over the next 30 days, chances are lower for a positive result, but the magnitude of positive results > the magnitude of negative results. This is good.

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Beyond 30 days, Win % improves dramatically. While most traders will now double-down on their belief that it’s Bitcoin’s time to shine, the data suggests otherwise. If the data holds, probability suggests that Ethereum will now outperform.

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peace_love_crypto

-DB

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