Ethereum - A Contender for the Crown, or Impending Ice Age?
One of the fellows following me asked me about Ethereum, and in the process of answering his question, I started on the analysis and figured I'd just finish it and post it. Ethereum is a coin that I was really interested in when I first came back to crypto in July. As time has gone on and all of this bubble has played out, I have become increasingly bearish on it for the following reasons.
Ethereum is a solid project and Vitalik is a very capable and respectable guy. That being said, the value of this token intrinsically is actually pretty small, as one can quite easily see that the reason Ether has scaled in value is from demand and hype from the ICO phase, along with the potential that Ether could possibly dethrone Bitcoin's first mover advantage. The ICO phase is now completely destroyed and will never return. The bag holders it has left behind will never return to crypto and never be able to recover their losses, and that's not even counting those who got ripped off amidst scams.
It seems virtually none of the dApps that have come out are particularly groundbreaking or real-world usage to justify the enormous market cap they were once demanding. Arguably the best coin in ERC20 was OmiseGO, and that token is in brutal falling knife decline.
Worse is, when it comes to the idea of "The Flippening", Ethereum has a fundamental problem in this upcoming challenge because Bitcoin Core (BCore)/Blockstream has planted the BGold fork with a Proof of Work change to GPU mining. This means that if the day comes where the Bitcoin Core blockchain loses hashpower to Bitcoin Cash or Segwit2x and BCore parachutes to BGold, Ethereum will eat nuclear pain via multiple red candles because it'll lose its GPU mining network to BGold as BGold pumps in profitability.
Furthermore, think about it: What's the difference between Ethereum and Ethereum Classic? Ethereum Classic is ~$10 and Ethereum is $300. I realize the history of the fork and the differences between the two, but there is absolutely _not_ 2900% benefit to ETH over ETC, and so ETC pricing could be something that ETH returns to in the future.
Looking at the technicals we're in an ascending triangle and Ether should be building pressure to retest the ATH line. Ideally, the ATH line should be flat, but we can see the last run towards $400+ was anemic even amidst bubble mania. Right now, on the 6H chart, we have a red kumo twist, it has broken the bull run trendline from $16, and both MAs of Willy21 and Stoch RSI show downward, collapsing momentum, and momentum just logged its first purple tick. (Edit: This has changed since I prepared this post last night).
All this is great, but keep in mind, this pattern is not surprising for consolodation either, attracts a lot of short sellers, and can be squeezed very hard. With everyone throwing their hat in the ring for who can become "Bitcoin" in November, I'm sure Ether will make itself known. But right now, neither price actions nor fundamentals are looking particularly healthy for it.
I wrote this last night and didn't publish it. In the mean time, Ethereum just had a nice spike and may be waking up for exactly the scenario above. A breakout above $325 would be indicative of a new run. However, for the size of breakout it is (small), it's extended the oscillators pretty far, so it may end up failing and breaking down quicker than it looks, and it may continue to break out upwards.
Ethereum is a solid project and Vitalik is a very capable and respectable guy. That being said, the value of this token intrinsically is actually pretty small, as one can quite easily see that the reason Ether has scaled in value is from demand and hype from the ICO phase, along with the potential that Ether could possibly dethrone Bitcoin's first mover advantage. The ICO phase is now completely destroyed and will never return. The bag holders it has left behind will never return to crypto and never be able to recover their losses, and that's not even counting those who got ripped off amidst scams.
It seems virtually none of the dApps that have come out are particularly groundbreaking or real-world usage to justify the enormous market cap they were once demanding. Arguably the best coin in ERC20 was OmiseGO, and that token is in brutal falling knife decline.
Worse is, when it comes to the idea of "The Flippening", Ethereum has a fundamental problem in this upcoming challenge because Bitcoin Core (BCore)/Blockstream has planted the BGold fork with a Proof of Work change to GPU mining. This means that if the day comes where the Bitcoin Core blockchain loses hashpower to Bitcoin Cash or Segwit2x and BCore parachutes to BGold, Ethereum will eat nuclear pain via multiple red candles because it'll lose its GPU mining network to BGold as BGold pumps in profitability.
Furthermore, think about it: What's the difference between Ethereum and Ethereum Classic? Ethereum Classic is ~$10 and Ethereum is $300. I realize the history of the fork and the differences between the two, but there is absolutely _not_ 2900% benefit to ETH over ETC, and so ETC pricing could be something that ETH returns to in the future.
Looking at the technicals we're in an ascending triangle and Ether should be building pressure to retest the ATH line. Ideally, the ATH line should be flat, but we can see the last run towards $400+ was anemic even amidst bubble mania. Right now, on the 6H chart, we have a red kumo twist, it has broken the bull run trendline from $16, and both MAs of Willy21 and Stoch RSI show downward, collapsing momentum, and momentum just logged its first purple tick. (Edit: This has changed since I prepared this post last night).
All this is great, but keep in mind, this pattern is not surprising for consolodation either, attracts a lot of short sellers, and can be squeezed very hard. With everyone throwing their hat in the ring for who can become "Bitcoin" in November, I'm sure Ether will make itself known. But right now, neither price actions nor fundamentals are looking particularly healthy for it.
I wrote this last night and didn't publish it. In the mean time, Ethereum just had a nice spike and may be waking up for exactly the scenario above. A breakout above $325 would be indicative of a new run. However, for the size of breakout it is (small), it's extended the oscillators pretty far, so it may end up failing and breaking down quicker than it looks, and it may continue to break out upwards.