What we see over here is ethereums long term chart since august of 2017., so weve got parts of the bull run in 17, then weve got our crypto winter. In 2018, we went down by more than 90 percent and then the 2020 2021 rally with the recent crash that brought us down from the top to the current price by roughly 75 percent. Now there are two indicators over here. The very first one is the blue line drawn within the top chart. This is a moving average and to be more specific, its the simple moving average with a tick size of 90 on the daily time frame. So this is the 90 day, simple moving average and with that moving average we see the lower chart over here. Let me actually get this a bit more visible. This lower chart is the moving average extension, so the horizontal red line that we see over here is the zero line. This is when the price crossed the moving average right here. Look, for example, on the 21st of july, the price crossed the moving average. We are now crossing the red horizontal line, the zero line, and the y axis here is the extent to how much we went above or below that moving average. So when we look here in january of 2021, we went above one right, so we went above one for this moving average extension, meaning the price at the time was more than double what the value of the moving average was now.

Why is this extension useful? Because it gives us some kind of a range right if we are really shooting up quickly or were really crashing quickly. We might get an idea of when we could potentially turn around so lets move around this red line here and lets maybe get to the bottom. What we can see is that ethereum has never crashed that quickly before so. The red line now is at minus 55, so a 55 lower value in the price compared to the moving average and its surprising. We crashed that quickly, because when we look at these peaks here right, they rather tend to decline over time. In other words, the volatility tends to decline. This is rather going down to a certain degree, the rallies they are less and less pronounced. They are slower and slower. We tend to revert quicker to the moving average over time, so we should expect when volatility is going down, that also the downside volatility should decrease right. We should expect that if the rallies arent that exuberant anymore, that the crashes might also be somewhat muted, but this is not what were seeing, but we actually see a crash that never happened to that magnitude before even during 2018.. Now does this mean here? Does this very low value, or this very high extension from the moving average now mean that we are going up that we are going to revert again since we have seen such an extreme outlier now at some point in time, we will obviously go back to the Zero line right, we cant crash forever at this pace, but that doesnt necessarily mean that the price will recover.

Lets. Look at prior low points here. So lets look at the very first low point, the one in april of 2018.. We did get a nice rally afterwards right. We did get our 126 or hundred thirty percent rally after we hit that low, but we didnt turn around on a macro cycle scale right. We afterwards still had our massive crash when we look at the next low. So this was september of 2018. Again we did see a temporary short term relief rally 40, but then it just continued to crash down the third time we hit those low levels. This is then, where we actually hit the ultimate low of that cycle right. We then did never come below this price. This was at roughly 85 or so so, when we now quickly zoom forward into the future, we again had our long term rally. Now we see our first crash. Do i expect that we have to see new. All time highs from here, nobody knows for sure, but what we can say from the past is that all of these low points tend to indicate are medium term rallies that can be 30, 40, 50, even above 100, if youre lucky, we actually do turn around, but Especially after we have expanded for such an extended period of time, there is obviously also more room to fall short term. However, right in, like the first one, two three four five weeks, i think its not entirely unreasonable to assume that we could see a relief rally right.

So if you just overlay this again, this is very much possible, which would then be in line to even go above the moving average very likely. Now this is the 90 day, simple moving average. We can look at something very similar for the 45 days, so a bit more short term lets update the charts. So this is now the 45 day. It is closer to the price right lets. Compare those two moving averages that we can see the difference. The 90 day is further away from the price right. It reacts slower. We average out more data from the past, so its less reactive to the price. Once we go shorter on the duration, we tend to cross these moving averages. More often now lets again look at the low points over here. This looks slightly different right. What we can see over here is that actually, the corona crash tended to be a bit more brutal on the very short time frame right. We did go lower during the corona crash, but we have seen similar kinds of bottoms to the recent bottom in the 2018 crypto winter. What i also find interesting when looking at this is that, during a bull market, we tend to not crash down very much right, see how most of the time we are above the moving average if we are below, we only go very slightly below this. Only when we really extend relatively far from the moving average thats when we have an extended bear market – and this is now pretty much the first time again right where we are so far extended, so this could be a sign for a continued bear now.

That being said, right, a relief rally is not unlikely thats. Also. What happened here for the 45 day were pretty much measuring here. The exact same rallies, the extension from the 45 day and the 90 day. They tend to happen pretty much at the same times over here. The low on the 6th of december 2018 was also a relatively low price. We did go temporarily a bit lower right. So, even though we hit a low on the extension, doesnt have to mean that we hit a low on the price, then afterwards went down another 10 percent or so, but it does mean that over the short term, we are very depressed that probably most liquidations have Already appeared that most of the selling by the bears has already been executed. If we now look at the corona crash, of course, we then afterwards saw a whole new turnaround, the low we saw recently it appeared on the 18th of june, and it coincided also with the price low right, so the most extension in a negative way. We got from the moving average was also the lowest point versus the moving average. This is no science right. This is just ta, but still it gives us hints of where bearishness might be at its maximum and where we might consider potentially a contrarian bet. How am i personally reacting to this im personally, not really an ethereum bull? To be honest, i think the problem ethereum has with its technical execution the over promising under delivering the competition of other smart contract platforms and also the recent appreciation of bitcoin versus ethereum.

It all tends to point towards bitcoin being the better asset in a bear market. The upside potential for ethereum is limited. The downside is definitely there. There are risks. The merge hasnt yet happened. Gas fees might not decrease with the change of proof of work. To proof of stake so thats all fundamental thats, not ta from a ta perspective, though a short term relief rally is not completely unlikely right. It is what happened in the past when we had been that extended from the moving average dont forget to subscribe. In case you enjoyed this video and a like would be appreciated as well feel free to also check out the premium membership thats to be found at thebitcoinstraight.com.

https://www.youtube.com/watch?v=Aqg8REpksbs