Market breadth, a key indicator used to understand the overall health of a market or an index, indicates that both the crypto market and Wall Street’s tech-heavy index, the Nasdaq, are experiencing short-term weakness within a long-term uptrend.
Breadth is typically measured by comparing the number of advancing stocks or cryptocurrencies to those declining. Traders also analyze the number of assets trading above or below key moving averages—such as the 50-day and 200-day SMAs—to assess both short-term and long-term market trends. This article focuses specifically on these moving average-based breadth indicators.
As of writing, 63 of the top 100 cryptocurrencies by market value, including bitcoin (BTC), traded above their respective 200-day simple moving average (SMA), according to data source TradingView.
The top 100 coins have market capitalizations of over $1 billion and are less prone to price manipulation than their smaller counterparts.
At the same time, 50 coins traded below their 50-day SMAs.
Interestingly, Nasdaq, which comprises 100 stocks, displayed a similar profile on Monday, with 61 stocks trading above their 200-day SMAs and 49 below their 50-day SMAs.
Implications
The data indicates that the long-term trend for both markets remains bullish with a clear majority of assets trading above their 200-day SMAs. The 200-day average is widely tracked as a barometer for long-term trends by both retail and institutional investors.
That said, the immediate outlook is steadily worsening as 50% of assets in both markets trade below the 50-day SMA, which is a short-term trend indicator. A price below this average suggests a recent loss of momentum and a potential short-term downtrend.
The identical market breadth of the two markets suggests that the short-term weakness is not an isolated event, but a widespread phenomenon affecting both cryptocurrency and traditional markets. Perhaps, traders in both markets are de-risking their portfolios ahead of the impending speech by Federal Reserve Chairman Jerome Powell at the Jackson Hole symposium this week.
Read more: Crypto Traders Eye Jackson Hole as Ether, XRP, Solana Drop Sharply in Retreat