Intro
Relative strength analysis is widely used to compare the performance of particular assets with that of a benchmark.
In this case, we are comparing the performance of BTC, a benchmark cryptocurrency, with the performance of EOS, ETH & LTC over the past 30 days. The performance is stated in percentage terms.
The goal is to identify whether EOS, ETH, and LTC are under-performing or outperforming the market (BTC), and, based on that information, generate BUY and SELL signals for EOS, ETH, and LTC for the next week taking into account the current trend for Bitcoin.
Underlying assumptions
The correlation coefficients between the BTC price and the prices of EOS, ETH, and LTC are all positive and close to one. This basically means that EOS, ETH, and LTC are all usually moving in the same direction as BTC. The difference in their performance can be primarily attributed to volatility (the magnitude of price fluctuations). This means that more volatile cryptos will most probably outperform BTC when BTC is rising, and will most probably underperform BTC when it is declining.
Analysis
Over the past 30 days, the performance of Bitcoin - the benchmark cryptocurrency - has been +12.9%.
As can be seen from the line chart above, the performance of all the three altcoins has been higher:
- ETH/USD +27.2% - Outperformance
- LTC/USD +63.0% - Strong outperformance
- EOS/USD +67.1% - Strong outperformance
EOS and Litecoin have appreciated the most, showing an incredible 67% and 63% price appreciation, respectively.
Ethereum has been relatively on par with Bitcoin, achieving slightly better performance.
Trading recommendations
EOS/USD seems to be relatively overvalued at this point given its 5.6-times outperformance of BTC over the past 30 days. In case there will be a short-term correction for BTC, there is a good chance that EOS/USD will depreciate much stronger, which constitutes a significant risk. I would recommend waiting for a short-term correction and short selling it.
The same applies to LTC/USD - it has outperformed Bitcoin by 5.3 times over the past 30 days, which makes it relatively expensive at this point. I would recommend waiting for a short-term correction and short selling it.
ETH/USD exhibited relatively neutral performance, as compared to BTC.
If you believe that BTC will decline over the next week - you should definitely short sell EOS and LTC. Those two altcoins will drop most of all in the case of BTC price decline, and you will maximize your profits.
Note that currently, the trend for BTC/USD (H1) is UPWARD. If you decide to go LONG over the next week - Buy BTC and ETH, and refrain from buying in EOS and LTC.
I hope this analysis was useful to you.
If you like it and would like to receive future updates - Please, follow me on TradingView!
If you agree, please, Like this idea - This would be the best feedback and encouragement to me!
Relative strength analysis is widely used to compare the performance of particular assets with that of a benchmark.
In this case, we are comparing the performance of BTC, a benchmark cryptocurrency, with the performance of EOS, ETH & LTC over the past 30 days. The performance is stated in percentage terms.
The goal is to identify whether EOS, ETH, and LTC are under-performing or outperforming the market (BTC), and, based on that information, generate BUY and SELL signals for EOS, ETH, and LTC for the next week taking into account the current trend for Bitcoin.
Underlying assumptions
The correlation coefficients between the BTC price and the prices of EOS, ETH, and LTC are all positive and close to one. This basically means that EOS, ETH, and LTC are all usually moving in the same direction as BTC. The difference in their performance can be primarily attributed to volatility (the magnitude of price fluctuations). This means that more volatile cryptos will most probably outperform BTC when BTC is rising, and will most probably underperform BTC when it is declining.
Analysis
Over the past 30 days, the performance of Bitcoin - the benchmark cryptocurrency - has been +12.9%.
As can be seen from the line chart above, the performance of all the three altcoins has been higher:
- ETH/USD +27.2% - Outperformance
- LTC/USD +63.0% - Strong outperformance
- EOS/USD +67.1% - Strong outperformance
EOS and Litecoin have appreciated the most, showing an incredible 67% and 63% price appreciation, respectively.
Ethereum has been relatively on par with Bitcoin, achieving slightly better performance.
Trading recommendations
EOS/USD seems to be relatively overvalued at this point given its 5.6-times outperformance of BTC over the past 30 days. In case there will be a short-term correction for BTC, there is a good chance that EOS/USD will depreciate much stronger, which constitutes a significant risk. I would recommend waiting for a short-term correction and short selling it.
The same applies to LTC/USD - it has outperformed Bitcoin by 5.3 times over the past 30 days, which makes it relatively expensive at this point. I would recommend waiting for a short-term correction and short selling it.
ETH/USD exhibited relatively neutral performance, as compared to BTC.
If you believe that BTC will decline over the next week - you should definitely short sell EOS and LTC. Those two altcoins will drop most of all in the case of BTC price decline, and you will maximize your profits.
Note that currently, the trend for BTC/USD (H1) is UPWARD. If you decide to go LONG over the next week - Buy BTC and ETH, and refrain from buying in EOS and LTC.
I hope this analysis was useful to you.
If you like it and would like to receive future updates - Please, follow me on TradingView!
If you agree, please, Like this idea - This would be the best feedback and encouragement to me!
