ETHBTC: Ethereum-Bitcoin Elliott Wave Structure

Updated

ETHBTC is the market for Ethereum paid for in Bitcoin. It provides the long term holder of ETH or BTC the opportunity to move assets in either coin between the two major cryptocurrencies for growth depending on which coin is performing better at any given time with respect to a given fiat currency, such as the US dollar. As such it directly couples the BTCUSD and ETHUSD markets. Given the size of the BTCUSD and BTCEUR markets, the corresponding ETHUSD and ETHEUR markets generally trend with their big and older sibling. The Ethereum community is expecting that ETH will overtake BTC at some point, because of its technical features for trading more sophisticated assets, for example via smart contracts, which are essentially algorithms executed on the blockchain depending on predefined conditions.

In the current bull market, the performance of ETHUSD has been lagging that of Bitcoin/USD, which has already printed a new high since the September correction, while ETH is still close to 20% away from its prior high of just over 4000. The ETHBTC chart shows the reason. ETHBTC is range locked into a converging triangle formation since the Spring 2021 crypto correction. ETHUSD performance cannot improve in a consistent manner until this triangle is completed, and the next leg, the fifth wave of the five-wave impulse has started.

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The lower trend line of the converging triangle structure since May contained the descend of ETHBTC on this leg of the formation at just around 0.062, the lowest point since the beginning of August. We should expect a rise now to the upper trend line, which should provide ETHUSD a much better performance than it has had since the beginning of the September correction. Perhaps ETHUSD and the other fiat-based markets can now catch up and print a new high pretty soon and begin challenging the ATH by the end of the month.

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Well, the market managed to take ETHBTC a step lower yet, perhaps 0.060 was the goal of the masters. The wave structure of this entire descend is pretty complex, perhaps it is a double zig-zag. I had to move my bottom trend line a bit, but this is not crucial.
We have to see where this little rebound of today leads to. Hopefully it is a sign of reversal. If so, ETHUSD finally has a chance to catch up with BTC's performance of late. Is this a good entry point for ETHUSD perhaps?

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Some really bullish looking waves are forming in ETHBTC and the market has added about 5% today, from the bottom of 0.060 to 0.063.

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The upswing in ETHBTC overnight is highly suspicious of being purely corrective in nature, a B-wave only, not a new motive wave. Elliott waves go five waves up and three waves down. The first wave of the correction, A, should be a five wave sequence and that is in agreement with the chart. Since it has five subwaves, it cannot be the entire correction yet. A final wave down, C, is missing to form a proper ABC structure built from 5-3-5-structured subwaves.

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I can see a technical justification for calling an end of the correction in wave (C) of ((2)). I am still a little caution until some higher level, but here is the chart:

We should appreciate the accuracy of my prior forecast, as only the Elliott Wave Principle provides the tools to accomplish this, I believe.

The (C) wave may be an ending diagonal, characterized by a deep retrace in wave 4 of the preceding third wave. However, we cannot exclude the possibility that the fifth wave down may develop into a larger wave, reaching further down. As progressed so far, it does almost reach the 1.618 extension level of wave one.

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I would not at all be surprised by a deeper correction, should it develop, because so far this entire ABC structure looks like a flat, with (C) not even extending beyond the (A). A flat should have a three-wave structure in (A), not five waves.

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The triad of ETHUSD, BTCUSD, and ETHBTC are finally in a directionally synchronized state, each enhancing price action mutually. We should expect ETHUSD to finally produce some significant gains alongside BTCUSD.
Indeed, ETHUSD is advancing right now into the mid-3600s.

The analysis here of ETHBTC was spot on, and indeed produced a lower retracement than shown in the previous chart. In fact, it reach the ideal depth of 61.8 % with its wick. Since then a five-wave impulse formed to the upside.

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The synchronization of ETHBTC, with BTCUSD and ETHUSD, with a retreating dollar has produced great gains for ETHUSD this morning, for the first time advancing close to 3800, since the early September high of 4030. Continued strength should be expected from ETHBTC, notwithstanding the compulsory retracements after every five waves up, so that a new ATH for Ethereum/Dollar should be in reach this month.

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After posting a new local high in this leg of the larger formation (probably a triangle)
ETHBTC is trading in its compulsory correction in wave ((4)) to get ready for the next leg up.

This correction should finish further to the downside of current prices, as only subwave A appears complete (five waves down).

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The third wave, ((3)), was impressive and ended right on the 1.618 extension level. It enabled ETHUSD to propel into the 3800 territory once again.

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No matter how impressive the performance was, it was not a third wave. The wave count got invalidated by the deep retrace of the advance from 0.060, with a bottom of about 0.062. Thus prices dropped deep into the range of what I had as wave one, no longer. Wave one is probably an ((A)), and wave three, a ((C)) wave and the entire ABC-sequence could possibly construct the first wave, ((a)), of the larger triangle leg, which has to consist of three waves. This would be a flat, since ((a)) has only three waves, by this idea. It is only an idea right now and we might not know the correct structure until the entire leg is finished, perhaps some time in November. Nevertheless, we can follow the subwaves and be productive on smaller scales. For now, the rebound from that retrace has already produced 3900-level prices for ETHUSD, and a challenge to the ATH there should be forthcoming in the near future.

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A possible scenario for the course of ETHBTC for the next few hours and days might be the following chart.

The third wave has already reached the 2.0 Log Fib extension of (1), and could be finished, but I am open to more upside in support of ETHUSD's strong performance today.

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The last "forecast" was clearly not the market's idea, mine only. The wave count got swiftly invalidated again by trading deep into wave one territory. This all looks like ABCs in the largest wave degrees. We have to realize that the larger formation is corrective, likely a multi-month triangle. A triangle consists of three-wave legs, a three-wave leg can consist of 3-3-5 wave structures, so the five-wave sequences are buried in the smaller degrees, which is really what is visible so far.
I'll just observe the development of this leg up, rather than make grand predictions. Once formed, I am sure we can identify the pieces and compose the grand view at some point.

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The ETHBTC market has gone lower, to 0.05930, and broken my trend line again. Not a problem, just shows that I have to move it, because the market was not yet in the next leg of the triangle. The structure since, is still part of the down-leg.

Price has rebounded sharply from there, aiding in the acceleration of ETHUSD to a new post-May high of over 4100. With BTC helping the push, we should expect a new ATH for ETHUSD soon. If ETHBTC finally plays along by continuing the upswing and making it a multi-week trend, we should expect ETHUSD make new ATHs into December at least.

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The larger wave labels in this chart are raw, just ideas, and best ignored.

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ETHBTC has continued a strong uptrend, that has essentially turned parabolic.
Along with the BTC strength, which pushes ETHUSD more than it suppresses ETHBTC, it has enabled ETHUSD to mark a new local high over 4200, so that a new ATH seems in the near future, if the trends continue.

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ETH is tearing it up... continuing this leg up, now in apparent fifth wave, and pushing ETHUSD to near its ATH, which might just get broken in hours not days, if conditions remain.

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Woah, what was that? ETHUSD quickly accelerated less than 10 points of the ATH, and ETH as well as BTC crashed in a spike.

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Well, that was a fourth wave in ETHUSD. Its effect in ETHBTC was not nearly as dramatic, because the ratio of ETHUSD and BTCUSD didn't change as much, they both performed almost the same.

Here is an analysis of the wave structure of this for ETHUSD.

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ETHUSD managed to maintain its impulsive (bull) market structure during the effects of the 10/21 flash crash in the BTC market.

ETHBTC was effected only a form of a blip, and is now resuming its up-trend

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No wave structure in this chart, but it stands to reason that this pair has just created a new 1-2 sequence in higher degree. A clear five-wave structure appears finished from the bottom trend line of the larger triangle.

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Ethereum is off to a great start for November '21. In less than 2 full days ETHUSD has gained 10% already, driven by a sharp rise in ETHBTC and the relatively modest rise in BTCUSD.

Here is the ETHUSD chart with a projected November target of somewhere between 5800 and 6200, based on early metrics.

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ETHBTC has now reached 0.073. The target for this leg of the larger degree triangle is around 0.08. The leg has to have a three-wave structure, and it is still not clear where the end of even wave ((a)) might be. This probably means that we should expect a large swing at some point.

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This relative percentage chart shows both ETHBTC and ETHUSD (in orange) on the same scale, starting with the September low of ETHUSD, the start of the current rally through October.

It shows that through the first three weeks of October, ETHBTC was trending in opposite direction to ETHUSD. During this time ETHUSD was pushed primarily by the gains of Bitcoin, which depressed the ETH/BTC ratio.

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It seems that the first subwave ((a)) of the D-leg of the larger triangle is finally complete, and we are seeing the beginnings of a descent into wave ((b)), in orange in my chart.

BTC is in the midst of a breakout attempt into the 70k to 80k region, and such a strong performance could easily depress the bitcoin value of ETH, while still permitting ETHUSD to continue it journey to and above 5000, last seen at a high of 4796 or so.

Here is the larger view of the next few months:

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Not just the next few months, but an overview of the past year as well. The large triangle clearly represents a correction in fourth wave (4) and once finished some time around the end of the year or in January, we should expect acceleration toward a 1:10 ratio with BTC (= 0.1 ETHBTC). This might especially be the case if BTC shows any kind of weakness past the end of the year, which, by many analysts, is the expected high of the run. This could drive ETH very high (15k? 20k?) as it did in May when it was still accelerating while BTCUSD was already correcting.

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Just a trivial comparison, but memorable. If ETHBTC indeed reaches 0.1, a $200,000 bitcoin price, which some people expect in a couple months, translates to 20k in ETHUSD.

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The down trend in ETHBTC in subwave ((b)) of wave D continues. It looks like waves (a) and (b) are completed, and the final downward push (c) is in progress, likely to come to completion this week. I expect the final ETH/BTC ratio to arrive between 0.067 and 0.068.

Meanwhile, ETHUSD and BTCUSD have begun wave three of the uptrend from the November 6 lows of correction. Possible targets are about 80.3k for BTC and ETH 5.5k at the 1.618 Fibonacci multiple of their first waves. The ratio of these price points is 0.0687, in nice confluence with my target value for ETHBTC wave (c).

How this in fact plays out, we shall see soon... but the BTC and ETH charts look very bullish, poised for major gains this week.

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My thinking is that the structure of ((b)) is finally complete, has been for a while. Current action looks like the start of ((c)). Took a lot longer than anticipated, but was shallower too, reaching down only to 0.0695 or so.
ETHUSD seems ready to resume a strong uptrend after this correction of over 20%.

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ETHBTC is at a stage where we have to anticipate the arrival at a local top for this leg up. I had placed the upper triangle trend line at about 0.08, based only on a possible resistance line from the highs of June 7 and Sept 3. The first point is not part of the proper triangle, I believe. The second touching point (wave D) can be lower or higher, most likely lower so that the trend line is descending.
It looks like wave ((c)) of D has nearly completed five waves, with wave (v) only missing its fifth subwave, the hight of which should provide the sought after touching point.

There appears Fibonacci confluence at around 0.078 at the 1.618 extension for the fifth wave of wave five in the yellow target area.

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Leg D seems to have maxed out just inside my yellow zone at about 0.0771. Since then it clearly has exited its regression channel (2 sigma) of the last wave up. That completes a five-wave sequence for its third part, subwave ((c)).

Sure is interesting that the sharp drop-off came on the day of Covid-omicron market jitter, which took not only the equities markets down, but also BTC and ETH. The drop shows that ETH did a lot worse than BTC. If this is confirmed by a sustained downtrend now by ETHBTC in wave E, we should expect BTCUSD being the preferred vehicle in the near term, rather than ETHUSD.

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Surprise, surprise... So finally, at the end of November, Ether/USD got bullish again and put up almost 20% in a couple of days, easily piercing through the S/R zone and even looking at the ATH from only a 100 points down. But no surprise really, we have the second half of November to make up for. No doubt, more upside should be expected after this prolonged and deep correction that resembled the correction of September. Meanwhile, BTCUSD has not yet been so successful being rejected by its R/S zone of about a thousand+ points below 60k, bounded by the old weekly and monthly ATHs. This stagnation in BTC provided fuel for ETHBTC to accelerate into a new three-year high of 0.0835, approaching high of mid-May 2018, going well past the yellow zone in my previous chart. This raised the upper trend line of the larger degree triangle correction to form essentially a parallel channel for that fourth wave-- a giant bull flag in old-fashioned TA.

BTCUSD is still 12,000 points below its own ATH of 69k, far lagging ETH. But when BTC finally grinds through its resistance we should see a strong move upwards and outperform ETHUSD, which will finally sink ETHBTC into wave E.

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I adjusted the wave degrees here w/r/t to my previous charts, because there was no plausible way to catch up to the largest degree waves (1, 2) with the current degree. I have the June 2017 ATH of ETHBTC at Primary Degree wave ((1)).

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I should start a new topic, but here is the weekly chart. Missing in this Coinbase feed is the first year data from the start of ETH network.

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BTCUSD has some work to do to break out of the consolidation channel, and through the resistance zone, which once was our green zone of support. It's trying as the chart shows.

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While ETHUSD now appears in consolidation from its late November climb, ETHBTC is indeed dropping off sharply now. Triangle wave ((e)) seems in full progress, having dropped from 0.083 to 0.080 already. It's hard to estimate the depth of the e-wave. E-waves are often short of the lower trend line, but can also overshoot it. The lower trend line is at 0.061 at this point, which would be a loss of about 25% or so. It should happen in three waves down, a-b-c.

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While the triangle structure appears as the most probable formation for this fourth wave, it still needs solid confirmation by completing the E. We should not leave out the possibility of a shorter correction, such as a double three or just a flat, in case ETHUSD is gaining increasing strength over BTC. I was getting suspicious of this possibility yesterday, with the strength of the run since the weekend.

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Q: Any ETHBTC traders here?

unbeldi

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