Cryptocurrencies Hammered Over the Weekend, ETH/BTC Spread Continues to Rally

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ETHEREUM/BITCOIN (ETH/BTC) CHART AND ANALYSIS

• Cryptocurrencies slammed over the weekend.
• Ethereum/Bitcoin spread pushes ever higher.

The cryptocurrency market fell sharply over the weekend with a prior support level of around $53k giving way with ease. The sell-off happened as the markets rolled over into Asian trading hours and this lack of liquidity, and support break, led to sharp losses across the board with some exchanges showing Bitcoin spiking to a low just above $42k. Overconfidence in the market moving higher, and excessive leverage being used by traders, are given as two reasons for the speed of the sell-off and if the market is going to push higher then a long period of consolidation will be needed before traders regain confidence. It now looks increasingly likely that not only have we seen the high (Bitcoin) for this year and maybe for the many months ahead, but lower prices may become the new trend unless strong support turns up. The daily Bitcoin chart shows the market as heavily oversold and also highlights a gap between $51,750 and $49,750 that needs to be filled.

BITCOIN (BTC/USD) DAILY PRICE CHART – DECEMBER 6, 2021

We have taken a positive view of the Ethereum/Bitcoin spread for some weeks now and while we may be backing off slightly today from a fresh multi-month high, the spread remains attractive on a medium-to-longer term technical view. The daily chart suggests support now between two prior highs at 795 and 815, while the weekly chart shows a bullish cup and handle formation starting to break higher. With market direction still unclear, the ETH/BTC spread still offers traders a way into the market with reduced volatility and a directional bias on the two largest cryptocurrencies.

ETHEREUM/BITCOIN SPREAD (ETH/BTC) DAILY PRICE CHART – DECEMBER 6, 2021

ETHEREUM/BITCOIN SPREAD (ETH/BTC) WEEKLY PRICE CHART – DECEMBER 6, 2021

 

By Nick Cawley, Strategist, 6th December 2021. DailyFX