For how much longer will Bitcoin be willing to share the spotlight with Ethereum?

Gold bitcoin superimposed on chart
Tony Sycmore
By : ,  Market Analyst

A reflection of this, the chart of the spread showing the decline of Bitcoin against the rise in Ethereum has become one of the most popular on Twitter in recent weeks. It is being used to support the view of further Ethereum outperformance, based on the inverted head and shoulders bottoming pattern illustrated on the chart below.

ETHBTC Weekly Chart

While some may question the use of a spread chart that relies on only 6 years of price data for Ethereum, it is notable that spread trading strategies between coins are increasing in popularity in the rapidly developing digital asset space.

To put the speed of the evolution in context, Bitcoin as noted by JP Morgan has “already achieved the fastest-ever price appreciation of any must-have asset to which it is often compared, such as Gold (1970s), Japanese Equities (1980s), Tech stocks (1990s), Chinese Equities (2000s), Commodities (2000s) and FANG stocks (2010s).”

In light of this, it is reasonable to expect Bitcoin to share the market's spotlight with Ethereum for a while longer, during its period of consolidation.

Learn more about trading Bitcoin here

With this in mind, the view is that Bitcoin completed a 5 wave impulsive rally on the 14th of April, at the $64,895 high, that started from the March 2020 low. The decline from the $64,895 high to the recent $47,555 low, is viewed as Wave a of a three-wave “abc” correction.

The Wave b rally appears to have topped out at $59,000, right in a band of resistance coming from previous highs.

From here, allow for another leg lower (Wave c) towards support at $42,000 where signs of basing will be watched for as an opportunity to buy Bitcoin, in anticipation of the uptrend resuming.

Bitcoin Daily Chart

Source Tradingview. The figures stated areas of the 5th of May 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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