Eaglebrook: Progress In The Big Picture

(Eaglebrook Advisors) Bitcoin and ether’s weekly gains of 23.3% and 22.3% should serve as reminders to investors that the two assets are “down, but not out”; rallies often happen quite quickly, highlighting the importance of maintaining conviction.


  • Bitcoin and ether gained 23.3% and 22.8% last week as bitcoin moved above $20,000. While many remain hesitant after 2022, this rally should serve as a reminder of bitcoin and ether’s ability to bounce when conditions warrant
  • Bitcoin and ether are again above the “key levels” of the 2017/2018 peaks illustrating “progress, not perfection”
  • Bitcoin and ether have regained their 200d moving averages – a well-known trend indicator. We illustrate this importance on page two

Well, that was quick. In short fashion, bitcoin rallied to $20,906 with a 23.3% weekly gain, while ether rallied 22.3% to Sunday’s close of $1,552.

With this move, digital assets have outpaced equities year-to-date. Since the close of a tough 2022, bitcoin and ether have gained 26.4% and 29.4%, while the S&P 500 and the Nasdaq Composite have gained 4.2% and 5.9%, respectively.

So, with so many investors afraid of further contagion, what was the catalyst for the upside move?

Well for one, it appears to be a catch-up to the recent equity rally. As we discussed throughout much of 2022, inflation and its impact on yields, alongside the Fed and its impact on the dollar, were key overhangs to risk assets and particularly, the more speculative digital asset class.

And just as we believed, digital assets were likely to rally when these “macro-overhangs” move into the rearview mirror.

Equities first bottomed in anticipation of these improving conditions in mid-October, and while digital assets participated in the beginning of that rally, the FTX news “stole the show.”

Months later, there has yet to be another “shoe to fall” and the fear, uncertainty, and doubt (“FUD”) that remains is slowly being “priced in” as known risks to the industry today.

So, with little contagion news and November’s historic capitulation, the digital asset class has not experienced the leg lower that many believed could occur. This served as an underlying signal of market resiliency.

This, alongside last week’s CPI print, was reason for the market to rally: disinflationary trends have continued, and the Fed’s rate hikes are likely nearing an end. While markets remain concerned with a soft or hard landing, the US economy is yet to crack after 425 basis points of rate hikes.

And in true crypto fashion, bitcoin and ether rallied relentlessly last week. Not only have the two retraced their losses experienced from the FTX ordeal, but are now 33.7% and 71.9% above their 2022 lows.

This rally, while small when compared to all-time highs, is large as it relates to the bottom-fishing opportunity. Rallies such as the one experienced should remind investors of the importance of maintaining conviction through tumultuous times, as price gains often happen quicker than expected. We offer some considerations of this rally’s strength:

  • Bitcoin gained 24.1% in 10 days, the best 10-day gain since October 2021
  • Bitcoin and ether reclaimed their 200D moving averages for the first time since December 2021 and April 2022 respectively, a popular long-term trend indicator (as shown below)
  • After months below its realized price, bitcoin has rallied above its on-chain fair value, a sign of strength
  • Ether, which never put in new yearly lows after June 18th, continues to outpace bitcoin, a sign of “risk-on” sentiment
  • Many large-cap altcoins bounced 50%+ from their lows, highlighting breadth of the crypto rally

And so, while there are “always reasons not to invest”, last week should remind investors that digital assets offer more “opportunity” than the “danger” perceived in recent months.


Bitcoin and ether have again moved above the 2017 and 2018 closing peaks, key levels we define as progress in the “big picture.”

Given the growth in the digital asset ecosystem alongside the rise in awareness, education, and both institutional and regulatory interest, we’d imagine that prices should be higher than previous cycle peaks. While this remained true for quite some time, a historic drawdown driven by a “double whammy” of both macro and idiosyncratic risk brought prices momentarily below those seen around five years ago.  

But last week’s rally has for now closed the window of opportunity to purchase this “dislocation”, which lasted about 73 days for bitcoin and 137 days for ether. As part of their bottoming process, reclaiming the previous peaks serves as a sign that “all is not lost” and the two are “down, but not out.”

Should this hold, these peaks as long-term support should provide confidence for those with hesitation.


Historically, the 200-day moving average is a well-known trend indicator for both traders and long-term investors. In theory, prices are trending upwards when the current price is above the 200-day average and trending downwards when the price is below.

With the most recent rally, bitcoin and ether are again above their 200-day moving averages.

When color-coding the price chart for when bitcoin is above and below this indicator, we see the potential for a “trend change” and what this may mean going forward.

Perhaps this is the beginning of a new bull market.

Click here to download full report. As always, please reach out with any questions or comments.

Stay tuned,

Joseph Orsini, CFA, CMT
Vice President of Research
Eaglebrook Advisors


More Articles