ETHEREUM's 60-Day Low Says A Lot About the Next 6 Months

Jun 12, 2023

IN TODAY’S LETTER

What we cover: ETH’s recent close at a 60-day low. Three filters provide a semi-unified perspective on the next 6 months. The Alt wreckage and TOTAL3.

TODAY’S STATS

Ether’s 60-day Low Provides 3 Perspectives on the Next 6 Months

Last week’s SEC one-two legal punch against Binance and Coinbase unleashed a wave of bloodletting among altcoins (more about that later in today’s Technical View), subsequently leading Ether to fall to a 60-day low. In the meantime Bitcoin has fared better, resisting the same two-month low seen in ETH. The contrast between the decimation of the alt space and the relatively muted drop in both ETH and BTC has already received well-deserved attention among crypto analysts, so today we’ll examine Ether’s current technical setup and what it says about the next six months.

In order to best gauge the outlook for Ether’s drop to a 60-day low, we’ll filter it three different ways: [1] ETH 60-day lows which occur > the 200ma [2] ETH 60-day lows which occur while the 200ma is rising (irrespective of whether ETH is above or below it), and [3] ETH 60-day lows which occur when its RSI(14) <= 40, a fairly low level for an up trending (though time-correcting) market, which we believe still describes Ethereum at present.

`ETHEREUM (ETH/USD). Daily Chart with 200ma and RSI(14) below 40.`

Now let’s look at the Holding Time analysis results for today’s conditions using these different filters broken into three separate queries. All results feature the Average Trade over various timeframes along with the Percent Profitable (i.e., Win %). Our commentary follows the results.

ETH QUERY #1 with “Above 200ma” filter

QUERY'S SETUP #1 CONDITIONS:

CONDITION 1: Ether closes at a 60-day low
CONDITION 2: Ether is above its 200-day moving average (200ma)


ENTRY AND EXIT CONDITIONS:

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

`ETHEREUM (ETH/USD). Hold Time Results: ETH 60-day low & above 200ma. 2016-Now.`

ETH QUERY #2 with “Rising 200ma” filter

QUERY'S SETUP #2 CONDITIONS:

CONDITION 1: Ether closes at a 60-day low
CONDITION 2: Ether's 200-day moving average (200ma) is rising


ENTRY AND EXIT CONDITIONS:

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

`ETHEREUM (ETH/USD). Hold Time Results: ETH 60-day low & 200ma is rising. 2016-Now.`

ETH QUERY #3 with “RSI <= 40” filter

QUERY'S SETUP #3 CONDITIONS:

CONDITION 1: Ether closes at a 60-day low
CONDITION 2: Ether's Relative Strength Index (14) <= 40


ENTRY AND EXIT CONDITIONS:

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

`ETHEREUM (ETH/USD). Hold Time Results: ETH 60-day low & RSI(14) <= 40. 2016-Now.`

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So what do these results share, if anything? Simply put, the short-term outlook (7 days through 30 days) for Ether is barely bullish at best (+3.2% with a 15-day hold) to meaningfully bearish at worst (-18.6% with a 30-day hold). Over the same short-term time horizon, the Win % ranges from a dismal 25% profitable to 50% profitable at best. The upshot? The stats all agree… expect very little in the next month.

But it’s not all so bleak and boring. The intermediate-term outlook (60 days to 6 months) improves significantly, especially over the 60-day and 90-day hold times, with a worst case average trade of +1.1% over 60 days to a best case average trade of +9.3% over 90 days. Average Trade results for all three variations are positive across both the 60-day and 90-day hold times - a relief to behold. Beyond that, the 180-day hold results lean bearish, something we do not typically see in our Ether queries.

While the REKTelligence Report routinely examines a variety of conditions for Bitcoin, Ether and occasionally other relevant markets, often with dramatically different results, our crypto analysis of late frequently points to a muddled short to intermediate-term picture, suggesting an environment demanding patience and forbearance for the foreseeable future. Keep your patience on, folks. Between the regulatory turf war and an uncertain macro environment, it’s mud season in crypto and by no means a walk in the park.

THE TECHNICAL VIEW

The Altcoin Tide is Still Receding

TOTAL3 shows the Total Crypto Market Cap excluding Bitcoin and Ethereum, providing us a good view of the altcoin space. As we’ve highlighted before, TOTAL3 has been unable to break above its November 2022 highs, failing to follow Bitcoin and Ether as they traversed the same highs earlier this year. It’s for this exact reason that we’ve previously declared that Alt Season it ain’t. Following the SEC-fueled bloodshed in alts, the REKTelligence STRETCH % indicator shows that TOTAL3 is now approximately -9.0% below the 20MA and a retest of the 2022 lows looks a near certainty. Several past lows in TOTAL3 have seen the STRETCH % reach at least -15.0%, so we could easily see more altcoin weakness ahead. We’ll continue to stick with the megacaps for now (i.e. BTC and ETH), avoiding the treacherous tide currently washing out the sh*tcoins. Stay alert out there… the altcoin tide is still receding, and filled with rip currents.

`TOTAL MARKET CAP excluding $BTC & $ETH (TOTAL3). Daily Chart with STRETCH %.`

THE TLDR

A Few Key Takeaways

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✔ The short-term outlook (7 days through 30 days) for Ether is barely bullish at best (+3.2% with a 15-day hold) to meaningfully bearish at worst (-18.6% with a 30-day hold).
✔  The intermediate-term outlook (60 days to 6 months) improves significantly
✔ Between the regulatory turf war and an uncertain macro environment, it’s mud season in crypto 
✔ Several past lows in TOTAL3 have seen the STRETCH % reach at least -15.0%, so we could easily see more altcoin weakness ahead.

peace_love_crypto

-DB

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