Good Omens

Chart of the Day

The larger crypto market was buoyed by the release of the CPI report on Wednesday, with BTC rising as high as $44k before falling back to consolidate above the $43k region where it is currently trading at. In a similar vein, ETH also saw a 3% price rally within the past 24 hours. However, based on some technical indicators, this recovery momentum may, unfortunately, be rather short lived, as it appears that both BTC and ETH are heading for a "Death Cross", where a death cross signifies a rare crossover of the 50-day and 200-day moving averages. As its name may suggest, a death cross is typically a bad omen — a tell-tale signal in stock trading for investors to get out of a position before things turn for the worse. It does not mean that all is necessarily doom and gloom for BTC and ETH from this point on though, as historical trends do point toward mixed outcomes. To put this into perspective, the crypto market has already experienced 8 death crosses so far, with 4 of said crossovers actually representing market bottoms. While the other 4 did precede major sell-offs with drawdowns ranging from 30-65%, there is no guarantee at all that this one will bring about the same. On the on-chain front, another rare occurrence is also playing out, as the cost bases for long-term and short-term holders are falling in tandem over a 30-day period, reflecting the violent price fluctuations that took place over the past month. Although neither TA nor on-chain metrics are definitively prognostic of future price actions, it is definitely interesting to speculate about what these rare occurrences have in store for traders in the near-term.