According to CoinDesk, Ethereum is close to forming a “death cross” on the ETH/BTC price chart. Is it really possible that the pair is sending out a downside signal? And why does such a figure form?
Yes, it looks like ETH/BTC is getting close to forming a “death cross” - a technical analysis pattern in which the 50-week moving average crosses below the 200-week moving average. This pattern is often viewed as a signal of a possible decline in the value of an asset.
The formation of a death cross flags the long-term performance of the ETH price has become even worse than a year earlier. This could signal a decline in demand for Ethereum relative to Bitcoin, perhaps due to the possibility that spot Ethereum ETFs will not be approved as well as the upcoming halving event.
Midlines and technical signals can be delayed and can flash many false positives. Many traders tend to focus on such signals in order to attract more traffic to their resources, although in practice they are not always reliable. So don’t be surprised if, after the final formation of the DEATH CROSS, the price rebounds by 16% to these lines. First, these signals are looked for on the daily chart, then on the weekly chart. Their reliability is quite dubious, so it’s important to read them as one of many factors, but by no means the only key metric and not one of overriding importance when making trading decisions.