Ethereum Dominance: “I might not be your little brother much longer.” Covered: How this weeks’ surge in equity market could be the beginning of this year’s Santa Rally  for “RISK-ON” assets. Ethereum’s price is gaining momentum against Bitcoin Ethereum Dominance Equity Market Sentiment and Bullish Price Action Is Likely To Affect Cryptos So far last […] The post A Case For Ethereum Gaining More Dominance appeared first on CryptosRus.

A Case For Ethereum Gaining More Dominance

Ethereum Dominance: “I might not be your little brother much longer.”

Covered:

  • How this weeks’ surge in equity market could be the beginning of this year’s Santa Rally  for “RISK-ON” assets.
  • Ethereum’s price is gaining momentum against Bitcoin
  • Ethereum Dominance

Equity Market Sentiment and Bullish Price Action Is Likely To Affect Cryptos

So far last week’s sell-off in cryptos turned out to be another liquidation break to shake out leverage. Unfortunately we don’t have the luxury of getting data from exchanges like some whales do.

If Robinhood is selling its customers order book to Citadel, a hedge fund with 35 billion USD of assets under its management (AUM), why wouldn’t whales and exchanges profit by doing it too?

This week started with a surge in “risk-on” assets (equities, cryptos, certain FX currencies pairs like AUD/JPY and crude oil).

Last week’s sentiment was quite very bearish according to some indicators like, Put/Call ratio which went as high as 0.97 on Friday (Considered high in the Covid era).

Recommended: TechDev Says There Is Tons Of Room To Run For Bitcoin 

Put/Call Ratio is a market sentiment indicator which measures an aggregate of stock options and index options. There are seperate versions which split put/call ratio for stocks, indexes. But this one is the composite. It also paints a better picture as well. This year typically Put/Call Ratio ratio has been at around 0.65 with 100 day moving average of it being 0.632.

However, on Friday it went as high as 0.97. When Put/Call ratio is high people are buying puts because they expect the market to fall even more.

This is often used as a contrarian indicator.

AAII Weekly Investor Sentiment Survey

Another sentiment indicator is AAII Weekly Investor Sentiment Survey. This is also another contrarian indicator.

The sentiment survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market short-to-medium term. It is done every Wednesday.

Last week we got the 2nd lowest reading for it since July 14 for bullish (26.7%) and for bearish (42.4%).

It’s not always right but this has been quite reliable over the years.

Combined with some chart analysis on equities indexes /ES (S&P 500 futures), /NQ (Nasdaq futures), and big tech stocks suggested an oversold bounce.

Fast forward to today (Dec 7,2021).

Equity Market On A Strong Bounce

Market’s bullish action is even stronger today. S&P 500 gained about 1% yesterday which is a substantial move. However, today it gained another 2% by its close for the day. This means that it’s only about 2% below its all-time high  on Nov 22.


 (SPX: Daily Chart)

In my estimation, this is the beginning of this year’s Santa Rally (at least in the equities so far). It’s much more likely that we will see new a high in SPX than otherwise.

“Risk-on” assets tend to move together so I won’t be surprised if cryptos start doing some catching up and some alt coins are already doing that.

But today I want to show an interesting chart that points towards a good potential increase in Ethereum’s market dominance.


(ETH/BTC Weekly Chart)

I have some reasons to consider that ETH has a chance of gaining more market dominance in the next few months. As you can see ETH’s market cap is about a half of that of BTC.

(Finviz: Cryptos Quarterly Performance)

The chart ETH/BTC (W) shows you a very clean “Cup & Handle” pattern.

Recommended: We Need To Talk About Ethereum, And How Its Going To 13k

Ethereum Dominance

Let’s see if we can stack our odds (Chart analysis is not about predicting but stacking probabilities based on back-testing and forward-testing).

  • ETH has been outperforming BTC. The last dip that happened over the weekend didn’t affect ETH as much as it did BTC.
  • Moving average structure: Moving averages all point towards up and it’s clearly in an uptrend.
  • Momentum oscillator suggests that fast momentum(yellow) is riding the slow momentum line (red) and both lines are above zero which indicates an up momentum.
  • Squeeze indicator suggests that the momentum is bullish and rising

So in conclusion, the odds are in favor for ETH outperforming BTC the next 3 months. If BTC can find some buyers to either consolidate or show a sign of recovery, ETH, which is closer to it all-time-high, is likely to gain buyers.

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