ETH has been getting absolutely crushed this week, both in dollar terms and in Bitcoin terms. As you can see, ETHUSD is now testing whether it can hold the 200 EMA, which in my experience is a really key support level. If ETHUSD can't hold this level, then the next stop is about 1440, with additional supports at 1115 and 730.
The Ethereum/Bitcoin ratio is also testing a key support at the 50 EMA:
Ethereum has strongly outperformed Bitcoin this year partly because there was a bit of a speculative bubble in ETH-based coins traded on Uniswap, and partly because ETH is expected to go proof-of-stake before the end of the year. The proof-of-stake merge would make Ethereum dramatically more environmentally friendly and would dramatically reduce transaction fees.
Bitcoin has (rightly) been getting lots of bad publicity because of how horrible the proof-of-work consensus mechanism is for the environment. Bitcoin basically destroys the planet by design, and personally I think the sooner it gets utterly trounced by the competition and utterly wiped from the face of our polluted planet, the better it will be for everyone. Even Elon Musk has recently come around to how awful Bitcoin is for the environment (although I suspect his motives in denouncing Bitcoin really had less to do with environmental impact than with the hole that Bitcoin left in Tesla's balance sheet because Tesla can't book Bitcoin as profit). We're seeing a significant regression to the mean right now, though, with Bitcoin greatly outperforming ETH.
The "cryptocrash" has of course been driven by the Chinese government's crackdown on cryptocurrencies and by the US government's efforts to impose regulatory oversight on the market. A trillion dollars of crypto market cap were wiped out this week. The news is bad enough and crypto is overvalued enough that I suspect ETH ultimately won't hold its 200 EMA support here, though we're likely to get a short-term bounce. We may see a prolonged period of weakness in crypto as traders wait to see how the regulatory crackdowns shake out, but we won't see the same rapid downward momentum we did this week. ETH is likely to return to strength against Bitcoin, however, as the ETH2 proof-of-stake merge progresses. Bitcoin will eventually die of a terminal failure to innovate.
I also expect that Cardano will continue to outperform Bitcoin, and possibly also ETH. Cardano is already proof-of-stake, and like ETH, it has a lively developer community. Cardano was created by academics and has been the subject of something like a hundred whitepapers. The Cardano community has raised several rounds of funding for development, the most recent in excess of a million dollars. Most alts will eventually go to zero, but Cardano is robust enough that I think it has a real chance of challenging the market leaders.
Another coin I'm keeping an eye on is Nano. Nano is a feeless proof-of-stake coin with extremely fast speeds and extremely low energy demands. However, the Nano network operates on a completely volunteer basis, with no compensation for running a node. This is the coin you invest in if you're optimistic about the human race, and you believe that people will do work without getting paid. Nano has recently struggled because its volunteer network isn't robust enough and has been getting shut down by a barrage of spam.
The cryptocrash has reduced crypto's market cap from about $2 trillion to about $1 trillion. Ultimately I think that's still way too high a valuation for what is basically a glorified wire transfer service. But the crypto hype isn't over yet, and we will almost certainly see some strong rallies later this year as the technologies continue to progress. I do think it's time to be very selective about which coins to buy, though, because the technology is maturing and we're seeing the emergence of clear technological and market leaders, and the coins that experience the worst government crackdowns moving forward from here will be the ones with the largest environmental costs.
The Ethereum/Bitcoin ratio is also testing a key support at the 50 EMA:
Ethereum has strongly outperformed Bitcoin this year partly because there was a bit of a speculative bubble in ETH-based coins traded on Uniswap, and partly because ETH is expected to go proof-of-stake before the end of the year. The proof-of-stake merge would make Ethereum dramatically more environmentally friendly and would dramatically reduce transaction fees.
Bitcoin has (rightly) been getting lots of bad publicity because of how horrible the proof-of-work consensus mechanism is for the environment. Bitcoin basically destroys the planet by design, and personally I think the sooner it gets utterly trounced by the competition and utterly wiped from the face of our polluted planet, the better it will be for everyone. Even Elon Musk has recently come around to how awful Bitcoin is for the environment (although I suspect his motives in denouncing Bitcoin really had less to do with environmental impact than with the hole that Bitcoin left in Tesla's balance sheet because Tesla can't book Bitcoin as profit). We're seeing a significant regression to the mean right now, though, with Bitcoin greatly outperforming ETH.
The "cryptocrash" has of course been driven by the Chinese government's crackdown on cryptocurrencies and by the US government's efforts to impose regulatory oversight on the market. A trillion dollars of crypto market cap were wiped out this week. The news is bad enough and crypto is overvalued enough that I suspect ETH ultimately won't hold its 200 EMA support here, though we're likely to get a short-term bounce. We may see a prolonged period of weakness in crypto as traders wait to see how the regulatory crackdowns shake out, but we won't see the same rapid downward momentum we did this week. ETH is likely to return to strength against Bitcoin, however, as the ETH2 proof-of-stake merge progresses. Bitcoin will eventually die of a terminal failure to innovate.
I also expect that Cardano will continue to outperform Bitcoin, and possibly also ETH. Cardano is already proof-of-stake, and like ETH, it has a lively developer community. Cardano was created by academics and has been the subject of something like a hundred whitepapers. The Cardano community has raised several rounds of funding for development, the most recent in excess of a million dollars. Most alts will eventually go to zero, but Cardano is robust enough that I think it has a real chance of challenging the market leaders.
Another coin I'm keeping an eye on is Nano. Nano is a feeless proof-of-stake coin with extremely fast speeds and extremely low energy demands. However, the Nano network operates on a completely volunteer basis, with no compensation for running a node. This is the coin you invest in if you're optimistic about the human race, and you believe that people will do work without getting paid. Nano has recently struggled because its volunteer network isn't robust enough and has been getting shut down by a barrage of spam.
The cryptocrash has reduced crypto's market cap from about $2 trillion to about $1 trillion. Ultimately I think that's still way too high a valuation for what is basically a glorified wire transfer service. But the crypto hype isn't over yet, and we will almost certainly see some strong rallies later this year as the technologies continue to progress. I do think it's time to be very selective about which coins to buy, though, because the technology is maturing and we're seeing the emergence of clear technological and market leaders, and the coins that experience the worst government crackdowns moving forward from here will be the ones with the largest environmental costs.
Comment:
The support level held quite strong. Today ETH has made a bullish move across its downtrend line. Still needs to close at least one bar above the 20 & 50 EMA resistance to signal resumption of the uptrend.
You know how crypto enthusiasts are always talking about all the different possible applications of blockchain technology, including DeFi, smart contracts, decentralized file storage, decentralized communications, decentralized social media, and even decentralized management of natural resources? Well, most of that stuff is being built on ETH. Which means that going long ETH is a kind of indirect way to go long a lot of those other future blockchain applications and technologies. There's just so much happening in the ETH space, and basically nothing happening in BTC.