This week, ether, the digital asset popularly known as ETH, has recorded a boost of over 3.5%. Yet, it seems to be locked on a trajectory towards forming what experts term a ‘death cross’. This is when ether’s 50-day simple moving average moves below its 200-day moving average, as evidenced by TradingView charts. Typically, a death cross signifies that the short-term trend is lagging behind the long-term direction, which is generally perceived as a long-term bearish omen.
However, a perusal through ether’s history might lead one to question this understanding. In its relatively short existence, ether has experienced six death crosses, only half of which lived up to their ominous reputation. In fact, the remaining half have bamboozled traders by contradicting market expectations.
For instance, after the death crosses confirmed on the dates of April 11, 2018, August 2, 2021, and January 28, 2022, ether registered substantial double-digit losses at the end of the twelve-month period. From a trader’s perspective, a short held for a year after each of these specific death crosses would prove to be quite profitable.
Yet, any trader maintaining a short position for the same duration following the first, third, and fourth death cross might have found themselves facing significant missed opportunities for profit, as they were greeted by an unanticipated triple-digit rally in the price of ether.
Interestingly, most of ether’s previous death crosses have proven to be contrary indicators, an unexpected turn of events where prices rebound, culminating in a golden cross within three to six months of the previous death cross.
In essence, this conveys that the death cross as a standalone indicator falls short in terms of reliability. Nevertheless, the upcoming death cross aligns with the bearish outlook prevalent in the ether options market and the persisting apprehensions about the slowdown in Ethereum’s network usage.
As things stand, ether is trading at approximately $1,710 at press time. A keen observer may perceive an allure in its unpredictability, while others might tread cautiously in light of the impending death cross. Clearly, ether’s market movements are a mesmerising spectacle, a blend of bearish indicators and bullish surprise rallies.
Source: Coindesk
