Cryptocurrencies in general have started a large corrective move. Bitcoin leads the way with a major weekly red candle forming following eight weeks of green (historically the maximum Bitcoin has achieved on a bull run extending past previous all time high).
It is clear to anyone watching the charts that Ethereum is correlating with Bitcoin on major moves, although this is being offset by gains during the overall bull run. Now that the bull run has completed for Bitcoin in the mid to long-term, expect a sharper reversal for Ethereum. Personally I expect the price to drop to the high 100s within the next few days, followed by volatility and then more overall downside over the next few months.
Aside from strong chart signals on all significant timescales, fundamentals are also fully aligned with this major correction, both in Bitcoin and Ethereum.
- Bitcoin faces the very real possibility of a split in the network in 6-8 weeks' time. The community is still split down the middle over scaling issues. Bitmain is reserving major mining power to support the non-Core Bitcoin chain if they so wish. There are a heap of murky secondary issues regarding ASICboost, patents etc that will not go away. The long term Bitcoin charts are screaming for a correction in price and slowdown for at least several months.
- Ethereum has been experiencing network congestion similar to Bitcoin's, with the network ceasing to function during ICO periods. Regarding these ICOs, following extraordinarily intense hype hundreds of millions of dollars of Ethereum is now kept in a series of smart contracts by dozens of brand new and unproven companies. The sentiment is the same as it was during the launch of the DAO just before things started going wrong - "a brave new world is upon us". There will be failures sooner or later, whether in funds management, companies failing, fraud... it is not a question of if, it is a question of when. Although the Ethereum protocol does not exist only for ICOs, these fundraising activities have gotten completely out of hand and one would be forgiven for thinking that they represent the sole purpose of Ethereum. They have taken all the limelight, and will continue to do so on Ethereum's behalf when things turn sour. The monthly Ethereum chart leaves no doubt - several months of correction / slowdown are beginning.
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It is taking a few more days than expected but I am still looking for significant drops in the price of ETH, despite Bitcoin holding up better than I first thought.
The drop in both Bitcoin and Etherium was not due to natural trading, it's quite obvious by the extreme correlation between the two currencies that a bot was involved. I don't believe basing your predictions on the last 48 hours is a sound idea.
BRRD
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@twisted89, it is not a bot. It is completely natural cycle. Why do you say I am basing my predictions on the last 48 hours? It is important as a trader to try to catch a reversal as quickly as possible, but I am clearly writing about longer timescales - see the point about the eight-week run of green candles for Bitcoin / the invitation to look at the monthly Ethereum chart (choose logarithmic). Make no mistake, a change of direction + some sideways action is now on the cards. Look at long-term histories for these cryptos.
twisted89
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@BRRD, You really think that 2 currencies are going to follow each other this closely naturally?
i.imgur.com/j2gS8ii.jpg
There is simply no way natural trading would correlate to that degree.
BRRD
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@twisted89, I agree that it is essentially arbitrary, but it is psychological in nature, which is an important element to consider with crypto as there is no standard model by which to judge value. So psychology is even more important than in regular markets!
Sometimes the peg is reversed - I've seen Ethereum in the past do the opposite to Bitcoin, but that's not the case now.
There is also the fact that they have both pumped very high relative to their respective past performances, over the past few months. What goes up must come down.
TheTiny
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@BRRD, Sure ... The question is only when... And right now the marked still seems bullish. Even at the local minimum of 250€ the curve was still above the logaritmic Trend Channel created 4 month ago (see here: tradingview.com/x/MBbBacJU/). The fact that the price correction didn't even touch the Trend Channel upper bound (tradingview.com/x/B0p9aE8i/) to me is a very bullish signal. Still...
I think the context of Bitcoin is important, and Bitcoin is more obviously bearish at the moment. It is an important signal.
Remember that at the top the market always seems very bullish. I remember in 2013 analysts on primetime new slots calling confidently for more upside, only to have a big continuation triangle post-top break downwards.
If past performance is anything to go by, Ethereum has done a long and strong bull run now. Betting on upwards movement is becoming riskier and riskier, while betting on downward movement is becoming safer and safer.
Thank you for sharing :)