Week of July 29, 2019 Market Analysis

By Jing Zhu (with aid from Hunter Metcalf)| Crescent City Capital Market Analyst Intern

Price Spread of ETH BTC 

Price spread ratios between Ether-Bitcoin (ETH BTC) and Litecoin-Bitcoin (LTC BTC) have been trading at historical lows throughout July. Especially for ETH BTC, the spreads moved to a new all-time low of 0.0197. This price is well below the 0.025 level which had previously served as strong support. On nearly every prior test of that level, the spread rebounded sharply over the next several trading sessions. Once ETH BTC broke that 0.0250 support (40 Ethereum equal the value of 1 Bitcoin), subsequent prices have consecutively lower closes, dipping below 0.0200 before settling around 0.0220. The drop from 0.0250 to 0.0197, which occurred from July 7th through July 14th, represents more than a two standard deviation weekly move. This is approximately a 24% drop from the July 7th open. While this downward trend does represent a statistically significant shift, it could also be one that precedes future price consolidations. Ethereum is currently losing value against Bitcoin, but that may indeed be the very fuel needed for the price to appreciate against Bitcoin again in the future. 

Price Spread of LTC BTC

LTC BTC experienced a similar value shift, as it broke the 0.010 support level (100 Litecoin equal the value of 1 Bitcoin). That level had served as resistance throughout the second half of 2018, and broke to the upside in February. The July 2019 low is now set at 0.0080 LTC BTC, and the market has since retraced and found value closer to the 0.0100 level. In light of Litecoin’s halving event on August 5, it is equally possible that its value could increase or decrease against Bitcoin. However, given the relative stability and growth of this coin so far, this coin stands a chance of regaining value.

For now, it is generally unclear whether these altcoins will appreciate against Bitcoin. Historically, however, Litecoin and Ethereum have tended to regain value over Bitcoin when they trade down to these levels. It is possible that history will repeat itself, as it often does in cryptocurrency market trends.