Ethereum’s Double RSI Bullish Divergence (Vs Bitcoin)
Crypto dropped hard and fast over the past few weeks. Normally, you’d expect bitcoin (BTC) to drop by less than ether (ETH) here, as investors flock to the “safest” digital asset. Except it didn’t: ether’s actually held up better than bitcoin in the latest market rout. This chart shows it—with ether firing off a double RSI bullish divergence signal (versus bitcoin). Here’s what it means.
The chart explained: ETHBTC and the RSI
Each red or green candlestick in the chart represents one week of price movement for the ETHBTC trading pair. It shows how many fractions of a bitcoin (satoshis) it would take to buy one ether. When it goes up, ether gets more expensive in bitcoin terms. In other words, you’re better off holding ether than bitcoin. When it goes down, ether gets cheaper compared to bitcoin—so you’d do better selling ether to buy bitcoin instead. Just keep in mind that the ETHBTC chart says nothing about the US dollar value of either crypto—only that one is doing relatively better than the other.
The blue line is the relative strength index (RSI). It divides the average percent gain of “up weeks” by the average percentage loss of “down weeks” over the past 14 weeks. When it goes up, it means the average gains are getting bigger than the average losses, so buyers are getting stronger than sellers. When it goes down, it means the opposite: sellers are getting stronger than buyers (per the indicator).
The ETHBTC chart has now made two lower lows since October 2023 and is still in a technical downtrend. But in that time, the RSI has made two higher lows. It’s a classic case of double RSI bullish divergence: even though the price is trending down, buying pressure is gaining relative strength compared to selling pressure (per the indicator).
So is Ethereum a better bet than Bitcoin right now?
There are two caveats to keep in mind here. First, this is a weekly trading time frame chart, so the signal can take months to fully play out (if it does at all). Second, ETHBTC is still in a downtrend, with lower lows and lower highs for the price.
Still, it’s hard to ignore the exaggerated bullish divergence here. Perhaps the second time’s the charm for Ethereum.
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