After having declined more than 15% relative to bitcoin (BTC) in the first four months of the year, ether (ETH) over the past two weeks has narrowed its underperformance to 11%.
The recent move has come despite muted price movements for the two cryptos and amid low volume, with bitcoin trading action 25% below its 20-day moving average and ether 33% below. Bullish ETH investors likely may be anchored to its now persistently deflationary status, with token supplies contracting by 240,000 since September.
A look at relative rotation graphs (RRG) shows both bitcoin and ether currently trailing traditional finance in performance and momentum over the most recent 10 days.
Relative Rotation Graphs display the relative strength and momentum of assets to a central benchmark. In this instance, the S&P 500 serves as the benchmark, while the Nasdaq 100 and Russell 2000 also serve as analogs. The most recent RRG shows BTC and ETH falling into a lagging quadrant relative to all three indices.
For context, lagging assets within RRG’s are underperforming on the basis of both performance and momentum.
A technical look at the ETH/BTC chart shows momentum increasing alongside the improved performance, with the Relative Strength Index (RSI) up 13.6..
A look back at historical RSI levels implies that prices may stall however. Since 2015, the ETH/BTC RSI has fallen between 52 and 54 approximately 112 times, with average 30 day performance of just .002%. The data highlights bitcoin’s tendency to outperform ether historically. The ETH/BTC pair is currently trading 40% below its 2018 maximum of $0.11.
An additional 2% move higher would push ETH/BTC past the upper range of its Bollinger Bands, amplifying its recent ascent. Recent history would dictate however that the pair would be likely to revert back to its 20 day moving average of $0.07