I will start off by saying this is not a recommendation to buy nor sell, not advice, and I am currently in a long position on ETH. I'm also not saying this will play out exactly the way I think since all it takes is a national government—or Elon Musk—to drop the entire crypto market out of the sky. However, I believe the transition between the two majors is finally taking place, and I will give both a technical and fundamental analysis on why:
Technical Analysis
ETHUSD
vs.
BTCUSD
Currently, on the daily, we are seeing an ascending triangle forming for ETH while BTC is forming a symmetrical triangle. Now, this doesn't immediately strike me as being a bearish indicator, as it's more neutral, however, we know that symmetrical triangles can sometimes lead to a downward move. The point here is I believe ETH will eventually lead the market to a bullish move; bringing BTC with it. We see volume trending down for both cryptos. Lastly, looking at the stochastic, we can see the momentum is starting to peak above 80 again. Something to note: my stochastic is setup to show me strength of momentum during a trend and overbought/oversold in a range. You can see what I mean by looking at the indicator on ETH between 4/29 and 5/12. Holding above 80, it moved roughly 56% from 2750 to its all-time high of 4330. On the flip side, BTC saw a similar move between 2/6 to 2/22 where it held above 80 and moved about 50% from 38400 to 58100 before falling into a range.
I threw some fib lines to show where there might be resistance after ETH breaks above the current triangle pattern. If there's enough support behind the crypto, I could see it form some resistance around 3640. From there, I'd project we'll likely see a bull flag form down to the 1.272 at 3230.
Again, these are just the technical indicators that I look at myself using a strategy that's mostly focused on equities. However, there are some fundamentals at play here that are a bit interesting.
Fundamental Analysis
Let's kick this off with some stats:
Since the COVID bottom on 3/13 that put ETH around 90 and BTC around 3800, both have made a killer comeback over the last 450 days.
Low to ATH:
As of today, BTC is down 45% while ETH is down 39% from their all-time highs of 64900 and 4380 respectively. Oddly enough, those all-time highs were nearly 1 month from each other, which, if you were around for the winter crypto boom of 2017/18, you remember that ETH hit its all-time high exactly 1 month after BTC. Now, we need to correlate the two powerhouses here and show the differences between then and now. During the winter 2017/18 run, BTC ran a staggering 1400%, while ETH ran a bit more to 1800%. From the 2017/18 high to the COVID low: BTC saw an 81% drop where ETC saw a staggering 94% drop.
One fun little stat comparing ETH to BTC between winter 2017/18 and now. As we mentioned above, BTC is currently down 45% from its ATH where ETH is 39% from its ATH. In 2017/18, factoring in the same 1-month lag for ETH to peak, BTC fell 55% where ETH fell 39%. This begs the question of: does this mean we're going to see ETH continue to perfectly correlate with BTC?
This is where I don't think that's the case anymore. The main reason for this drop was due to events that took place causing considerable fear in the crypto market. The fact that ETH is about to "hard" fork to ETH2, which is set to make the blockchain more efficient with proof of stake (PoS), is likely to attract even more influential names. Which we already have seen with Elon tweeting that he agrees with Vitalik. Potentially we could see Tesla (
TSLA
) eventually switch its BTC for ETH.
However, this is just pure speculation on my part. We'll see how the crypto market performs over the next few months and if ETH begins to have a mind of its own.
Technical Analysis
ETHUSD
vs.
BTCUSD
Currently, on the daily, we are seeing an ascending triangle forming for ETH while BTC is forming a symmetrical triangle. Now, this doesn't immediately strike me as being a bearish indicator, as it's more neutral, however, we know that symmetrical triangles can sometimes lead to a downward move. The point here is I believe ETH will eventually lead the market to a bullish move; bringing BTC with it. We see volume trending down for both cryptos. Lastly, looking at the stochastic, we can see the momentum is starting to peak above 80 again. Something to note: my stochastic is setup to show me strength of momentum during a trend and overbought/oversold in a range. You can see what I mean by looking at the indicator on ETH between 4/29 and 5/12. Holding above 80, it moved roughly 56% from 2750 to its all-time high of 4330. On the flip side, BTC saw a similar move between 2/6 to 2/22 where it held above 80 and moved about 50% from 38400 to 58100 before falling into a range.
I threw some fib lines to show where there might be resistance after ETH breaks above the current triangle pattern. If there's enough support behind the crypto, I could see it form some resistance around 3640. From there, I'd project we'll likely see a bull flag form down to the 1.272 at 3230.
Again, these are just the technical indicators that I look at myself using a strategy that's mostly focused on equities. However, there are some fundamentals at play here that are a bit interesting.
Fundamental Analysis
Let's kick this off with some stats:
Since the COVID bottom on 3/13 that put ETH around 90 and BTC around 3800, both have made a killer comeback over the last 450 days.
Low to ATH:
- BTC: 1600%
- ETH: 4900%
- BTC: 830%
- ETH: 2850%
As of today, BTC is down 45% while ETH is down 39% from their all-time highs of 64900 and 4380 respectively. Oddly enough, those all-time highs were nearly 1 month from each other, which, if you were around for the winter crypto boom of 2017/18, you remember that ETH hit its all-time high exactly 1 month after BTC. Now, we need to correlate the two powerhouses here and show the differences between then and now. During the winter 2017/18 run, BTC ran a staggering 1400%, while ETH ran a bit more to 1800%. From the 2017/18 high to the COVID low: BTC saw an 81% drop where ETC saw a staggering 94% drop.
One fun little stat comparing ETH to BTC between winter 2017/18 and now. As we mentioned above, BTC is currently down 45% from its ATH where ETH is 39% from its ATH. In 2017/18, factoring in the same 1-month lag for ETH to peak, BTC fell 55% where ETH fell 39%. This begs the question of: does this mean we're going to see ETH continue to perfectly correlate with BTC?
This is where I don't think that's the case anymore. The main reason for this drop was due to events that took place causing considerable fear in the crypto market. The fact that ETH is about to "hard" fork to ETH2, which is set to make the blockchain more efficient with proof of stake (PoS), is likely to attract even more influential names. Which we already have seen with Elon tweeting that he agrees with Vitalik. Potentially we could see Tesla (
TSLA
) eventually switch its BTC for ETH. However, this is just pure speculation on my part. We'll see how the crypto market performs over the next few months and if ETH begins to have a mind of its own.