Blocksmith Says: ETH’s Better Placed Than BTC

24 October 2022

In the last note the US dollar was seen to be at a key inflection point – it would either breakout or sink back in on itself. The preferred view was more bullish, but in fact the dollar has declined and right now we could either be looking lower for 110 or 105 depending on how much downtrend force is exerted (last price is 112.10 at time of writing). 

The move in the dollar was unspectacular, but it carried over to the Japanese yen which staged a large scale pump and dump around the key psychological 150 handle (which is near enough a 25-year high by the way).

Meantime the overall view for the S&P 500, the Nikkei and the euro is for more downside into mid-November when a long cycle is due to bottom (the 20 week). Probably a recovery here will be spun as the result of the 8 November US mid-term elections, but cycles don’t care about that sort of thing.  Looking over to blue chip crypto price action is still flaccid, choppy and scattered and is expected to more or less remain that way for the time being. 

We just went through an 80-day cycle low in Bitcoin, and so this cycle is technically rising, but is exerting no influence over price action at all. The cycles are always present, but sometimes they lie dormant.  That is what the 80-day cycle is doing now. Again, the big low isn’t expected until mid-November or thereabouts. With all that said however something noteworthy did happen in the Bitcoin | Ethereum spread.  

The chart shows the 240 minute level and the pattern into the 13 October low is called an ending diagonal. This is an Elliott wave term for a type of motive wave – as opposed to corrective, a motive wave runs the same way as the broad trend, which was down – and signals the end of a larger trend. These moves in a downtrend consist of a converging channel pointed lower and break down in five three-part moves 1 to 5. When we hit 5, it’s over. There has been a solid impulsive bounce out and the spread is rallying well, implying that ETH is a better place to be than BTC .. if you cannot resist the urge to trade that is.

Christopher Grafton
Christopher Grafton

Chris has been working in the markets for over 15 years variously as a broker, analyst and researcher. He is the author of a well-known book on Hurst cycles analysis, and runs his own market analysis software platform on Bloomberg. He’s also a keen student of both the cello and Brazilian Jiujitsu.

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