When I concluded the ETH analysis above from 2015, I almost fell off my chair. In my opinion it presents the best risk reward opportunity in the cryto space in Q1 2018. Focus on the bottom ETHBTC chart as this is the real driver of ETHUSD.
Some background
Those of you that have followed me for a while know that I initially got into ETH back in January of 2017 and have tracked it closely during that period. Over the past 6 months I have focused my analysis on ETH (and other coins) relative to BTC. Whilst my base currency is USD (not BTC), my view is that if I am long crypto, I want to make sure I am skewed to the over performing coins.
I focus on the long term trends, you can see from these posts that I called the December 2017 breakout of ETH relative to BTC (ETHBTC breakout in a week or two or sooner? ), then the path of ETHUSD and ETHBTC (ETHUSD to enter large leg 3 impulse driven by reversal on ETHBTC) and have also forecast ETHUSD hitting 1400 before a pull back in this post.
I have since spent time drilling down even further into the long term trend of ETH, using Bittrex data that goes back to 2015.
History
I have plotted ETHUSD and ETHBTC over the past 2.5 years using a log scale. From this you can see:
ETHBTC
- there have been two large bull impulses followed by two large bear impulses
- both bull impulses lasted approximately 150 days and produced an uplift of 2000%
- both bear impulses resulted in an 80% correction and both were longer than the bull impulses
ETHUSD
- there have been two large bull impulses followed by two large consolidation phases and these, unsurprisingly, share the same characteristics of ETHBTC
- Bull impulses up between 4500-7200% in approx 150 days
- Bear impulses down approx 70%
If history repeats itself
- we have approx 90 days of this bull impulse left and probably are in the middle of the third ETHBTC wave
- the third wave will reach to about 80% higher than the top of the previous wave 2 bear impulse (0.11 increase 80% to 0.20) followed by a quick but aggressive 4th wave pullback to around 0.11 again.
- ETHBTC will finish out with a 5th wave up to 0.5-0.6 BTC and ETHUSD to around $8k-$9k.
Scenario testing
I have more comfort in the ETHBTC price achieving its target than the ETHUSD price. However, if history repeats itself we would see ETH becoming the King of Cryptos and so we can compare some of the performance we have seen in BTC to what we might expect to see in ETH. So let's look at where the scenario would place us once it has played out by the middle of May (approx 70 days):
ETHBTC at 0.5
ETHUSD at $8,000
BTCUSD must be at $16,000
Mkcaps:
ETH $775bn
BTC $280bn
ETH previous high mkcap ($1,450) : $140bn
BTC previous high mkcap ($20,000) : $340bn
Therefore in approximately 90 days this would price ETH market cap at:
- x2 BTCs all time high
- x5 ETHs all time high
- x10 ETHs current
Time it took
- BTC to increase x5 from $4k to $20k: 75 days
- ETH to increase x10 to its $400 high: 80 days
Summary
History often repeats itself, although often the scale and timelines can be quite different, in the case of ETHBTC we have had two periods remarkably similar and a new one which could be unfolding to be the same. I'm not saying we are necessarily going to repeat these exact figures as even though the scenario testing suggests they are achievable, they do look high. However, if we can even get close to repeating a similar pattern, this in no doubt for me puts ETH as the buy of Q1 2018!
Please like (thumbsup) and follow if you want me to update over the next 90 days.
Some background
Those of you that have followed me for a while know that I initially got into ETH back in January of 2017 and have tracked it closely during that period. Over the past 6 months I have focused my analysis on ETH (and other coins) relative to BTC. Whilst my base currency is USD (not BTC), my view is that if I am long crypto, I want to make sure I am skewed to the over performing coins.
I focus on the long term trends, you can see from these posts that I called the December 2017 breakout of ETH relative to BTC (ETHBTC breakout in a week or two or sooner? ), then the path of ETHUSD and ETHBTC (ETHUSD to enter large leg 3 impulse driven by reversal on ETHBTC) and have also forecast ETHUSD hitting 1400 before a pull back in this post.
I have since spent time drilling down even further into the long term trend of ETH, using Bittrex data that goes back to 2015.
History
I have plotted ETHUSD and ETHBTC over the past 2.5 years using a log scale. From this you can see:
ETHBTC
- there have been two large bull impulses followed by two large bear impulses
- both bull impulses lasted approximately 150 days and produced an uplift of 2000%
- both bear impulses resulted in an 80% correction and both were longer than the bull impulses
ETHUSD
- there have been two large bull impulses followed by two large consolidation phases and these, unsurprisingly, share the same characteristics of ETHBTC
- Bull impulses up between 4500-7200% in approx 150 days
- Bear impulses down approx 70%
If history repeats itself
- we have approx 90 days of this bull impulse left and probably are in the middle of the third ETHBTC wave
- the third wave will reach to about 80% higher than the top of the previous wave 2 bear impulse (0.11 increase 80% to 0.20) followed by a quick but aggressive 4th wave pullback to around 0.11 again.
- ETHBTC will finish out with a 5th wave up to 0.5-0.6 BTC and ETHUSD to around $8k-$9k.
Scenario testing
I have more comfort in the ETHBTC price achieving its target than the ETHUSD price. However, if history repeats itself we would see ETH becoming the King of Cryptos and so we can compare some of the performance we have seen in BTC to what we might expect to see in ETH. So let's look at where the scenario would place us once it has played out by the middle of May (approx 70 days):
ETHBTC at 0.5
ETHUSD at $8,000
BTCUSD must be at $16,000
Mkcaps:
ETH $775bn
BTC $280bn
ETH previous high mkcap ($1,450) : $140bn
BTC previous high mkcap ($20,000) : $340bn
Therefore in approximately 90 days this would price ETH market cap at:
- x2 BTCs all time high
- x5 ETHs all time high
- x10 ETHs current
Time it took
- BTC to increase x5 from $4k to $20k: 75 days
- ETH to increase x10 to its $400 high: 80 days
Summary
History often repeats itself, although often the scale and timelines can be quite different, in the case of ETHBTC we have had two periods remarkably similar and a new one which could be unfolding to be the same. I'm not saying we are necessarily going to repeat these exact figures as even though the scenario testing suggests they are achievable, they do look high. However, if we can even get close to repeating a similar pattern, this in no doubt for me puts ETH as the buy of Q1 2018!
Please like (thumbsup) and follow if you want me to update over the next 90 days.
Comment:
I've added the top and bottom trend lines to the chart.
Comment:
My plan for buying more ETH or moving from BTC to ETH:
Comment:
I like to try and validate my convictions from a various view points. Both BTCUSD and ETHUSD have large H&S formations. Should they break up, the target would be the height of the head added to the neckline. Plotting this data would give:
ETH 1265 / 840 = 50%
BTC 12000 / 8543 = 40%
Calculated ETHBTC = 0.105
Not a massive data point, but helps support the hypothesis and an uptick in the chart.
ETH 1265 / 840 = 50%
BTC 12000 / 8543 = 40%
Calculated ETHBTC = 0.105
Not a massive data point, but helps support the hypothesis and an uptick in the chart.
Comment:
Short term support looks to be found at the diagonal up trend line and just above the 0.382 of the top of the last bull leg (shown as '3?') and 1D 50EMA. Note that last year's bull run did not break the 1D 50EMA in waves 2-4. This could create the reversal and new leg up and validate this hypothesis.
Next support below this is 0.5 fib @ 0.8.
Keep watching...
Next support below this is 0.5 fib @ 0.8.
Keep watching...
Comment:
We are currently in a consolidation from the high at 0.012. Is this an opportunity to buy or sell? I try and not predict what is going to happen but look for (i) potential change of trends at (ii) key areas.
On a relatively short time frame basis, we have just rejected the 0.382 top of the last bull leg (shown as '3?') and not far from the 1D 50EMA (which was never touched in the 2017 bull run). This could well be a reversal area for the consolidation that has occurred and allow us to continue wave 3.
We have the key area. I am now looking for confirmation of a more sustained rejection. This can come from a higher low on a time frame of at least 4hr but preferably 6,12 or 24hrs. Failing that, I'll be looking for a rejection of the local low (0.091), forming a double bottom.
On a relatively short time frame basis, we have just rejected the 0.382 top of the last bull leg (shown as '3?') and not far from the 1D 50EMA (which was never touched in the 2017 bull run). This could well be a reversal area for the consolidation that has occurred and allow us to continue wave 3.
We have the key area. I am now looking for confirmation of a more sustained rejection. This can come from a higher low on a time frame of at least 4hr but preferably 6,12 or 24hrs. Failing that, I'll be looking for a rejection of the local low (0.091), forming a double bottom.
Comment:
We are retesting the support at 0.091. I’m watching the 6 hour TF for a reversal here for a local double bottom.
Comment:
I'm comfortable that we are in the wave 4. We have blasted through the potential support at 0.382 (0.09) of wave 3 and tested the 0.5 (0.078) support before bouncing back up.
During the last 2017 ball run, wave 4 retracted to 0.5 also. In 2016 it retracted to just above 0.618. This year has some different characteristics. For example, this year we have broken the 1D 50EMA, but we didn't touch it in 2016 and 2017. We would also have expended wave 3 to go higher in the channel if we were matching year for year. This year, wave 3 'only' extended wave 1 by approximately 4.618, which is much closer to the 2016 fib extension of 5.618.
Looking forward to wave 5
2016 wave 5 extended wave 3 by 3.618, so we should probably be looking at an extension of around 2.618 to 3 for the wave 5 when it comes. This would take wave 5 to about 0.27BTC.
My plan
I am open minded about a reversal at 0.5 (0.078) or going down through 0.618 (0.068) or slightly further. To manage this risk. I therefore sold a bit of my trading ETH for BTC on the last retrace, slightly above 0.08.
We could go up from here or do a double bottom and reverse at the 0.5 (0.078) support again, so I will watch for this. A failure here and I will sell a bit more because I would assume we are heading for 0.618 (0.068).
We have some way to go before the wave count is invalidated by wave 4 crossing wave 1 at 0.045.
During the last 2017 ball run, wave 4 retracted to 0.5 also. In 2016 it retracted to just above 0.618. This year has some different characteristics. For example, this year we have broken the 1D 50EMA, but we didn't touch it in 2016 and 2017. We would also have expended wave 3 to go higher in the channel if we were matching year for year. This year, wave 3 'only' extended wave 1 by approximately 4.618, which is much closer to the 2016 fib extension of 5.618.
Looking forward to wave 5
2016 wave 5 extended wave 3 by 3.618, so we should probably be looking at an extension of around 2.618 to 3 for the wave 5 when it comes. This would take wave 5 to about 0.27BTC.
My plan
I am open minded about a reversal at 0.5 (0.078) or going down through 0.618 (0.068) or slightly further. To manage this risk. I therefore sold a bit of my trading ETH for BTC on the last retrace, slightly above 0.08.
We could go up from here or do a double bottom and reverse at the 0.5 (0.078) support again, so I will watch for this. A failure here and I will sell a bit more because I would assume we are heading for 0.618 (0.068).
We have some way to go before the wave count is invalidated by wave 4 crossing wave 1 at 0.045.
Comment:
I've worked through the wave count on this and *if* it holds, it would suggest we are more likely heading to the 0.618 fib contraction at around 0.068. We may see a Contracting Triangle in the next hours and if we drop out of that, it would signal further weakness. The wave count could be wrong and we may have bottomed out, this would probably be confirmed by a break up out of this triangle.
If we break down, I will sell the remainder of my trading pot and move some of my core until a reversal becomes evident.
If we break down, I will sell the remainder of my trading pot and move some of my core until a reversal becomes evident.
Comment:
Hopefully we have bottomed out. If we break through 0.91 I think we are onto leg 5. Just but be careful of this scenario.....
Comment:
Two alternative wave counts here. One takes us down to 0.068 (0.618 fib), the other starts a new minor 5 wave impulse up which I believe would be part of a major five wave impulse to finish the overall super 5th wave. I'll look to enter a trade in at either a reversal at 0.068 or if we breach the recent local high at 0.09, which would invalidate the abc count down.
I have had several people PM to ask whether to buy now or wait for a dip in ETHBTC. I think that question really depends on whether you think we have completed wave 3 in ETHBTC or not. It's something I've been trying to figure out myself. I've posted a link below to my thoughts.
Please note updates throughout the following period will be made here rather on any referenced post. So please post any questions and comments here.