If you missed your chance on Bitcoin, Dont miss Ethereum.
In this in depth analysis I will introduce you to my trading/investment plan for Ethereum (ETH) which is the #2 Cryptocurrency behind Bitcoin (BTC). I will explain the different concepts that I have used on the chart and also provide you with some insight into the specifics of Ethereum, and why I think this cryptocurrency could be your second chance to get in on the Digital Gold Rush. Lets start with the Fundamentals.
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Ethereum: A Brief Introduction & Background
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What is Ethereum:
White Paper (Info Doc):
github.com/ethereum/...iki/wiki/White-Paper
Website:
ethereum.org/en/
References:
messari.io/
www.bitdegree.org/
ethereum.org/en/
Ethereum is the community-run technology powering the cryptocurrency, ether (ETH) and thousands of decentralized applications.
Conception to token sale
Vitalik Buterin conceived Ethereum in 2013, after what he perceived as limitations in the functionality of Bitcoin’s scripting language, namely the lack of Turing completeness. Buterin published the first Ethereum white paper later that year, describing a distributed computing platform for executing smart contracts and building decentralized applications (dApps).
The rise of initial coin offerings (ICOs)
Ethereum's mainnet launched in July 2015, with the first live release known as Frontier. Shortly thereafter, Augur (REP) conducted the first Initial Coin Offering (ICO), in which the startup sold its Ethereum-based REP tokens (created via the ERC-20 standard) to help fund the project. The ability to develop and sell a newly generated token to help raise capital became an attractive method of fundraising because projects could circumvent the legal policies and costs required from traditional companies (until more recently). Ethereum-focused startups created thousands of new tokens since Augur's ICO, raising billions of dollars in the process.
Smart Contracts:
The Ethereum blockchain is designed so that transactions can only take place when certain conditions are met. The rules deciding these conditions are called ‘smart contracts’. It's an essential part of the what is Ethereum question.
Once one of these contracts is written, it can’t be changed. That’s why they are called ‘trustless’ transactions. You don’t need to trust individuals on the network — if the conditions of the contract aren’t met, then it won’t happen.
A trustless, fully transparent global network that never goes offline.
Decentralized Applications:
Decentralized applications (or ‘dApps’) are simply applications that do not run on a traditional central server. Instead, they run on a blockchain — which usually does not have a centralized point of authority or control.
Dapps are just like the variety of applications on your phone except Ethereum Dapps power a huge spectrum of activities in the Cryptocurrency world like digital loaning, providing liqudity, staking etc.
Ethereum has its own coding language called Solidity. Solidity is used to build dApps. Because Solidity is like JavaScript (one of the most common programming languages), it encourages developers to create new and exciting dApps.
The concept of Bitcoin is like digital money, but the Ethereum network is the powerhouse that fuels most of the backbone of the whole crypto market with many Stablecoins (the digital versions of FIAT Currencies like US Dollar, AUD, etc) and the Digital Economy are hosted on or linked to the Ethereum network, without this Crypto Trading & Defi (Decentralized Finance) would simply not be the same.
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The Situation:
A great explanation on the biggest present day problem affecting Ethereum by Messari Crypto is outlayed below.
"Ethereum supports an incredible amount of economic activity daily. It settles billions of dollars in transactions a day and runs tens of thousands of decentralized applications across its booming decentralized finance (DeFi) and non-fungible token (NFT) sectors. However, Ethereum blockspace is limited and all these applications compete for the same resources, meaning that transactions become more expensive and more delayed when the network is congested. Practically speaking for users, a smart contract transaction (e.g. Uniswap trade) on Ethereum could surpass hundreds of dollars depending on the congestion of the network, which results in prohibitively expensive interactions."
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Ethereum: The Rise to Power
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Overview of Fundamentals (Research about the Cryptocurrency Itself, NOT TECHNICAL ANALYSIS):
My personal thoughts.
In the past 4 years of my Cryptocurrency investing career I have seen Ethereum grow to become backbone of the whole Cryptocurrency market with many projects (Notably Defi & Stablecoins) being based off the Ethereum Network.
Even though the cryptocurrency has ridiculous fees data has shown that the amount of users and money flowing into this ecosystem continues to break records and increase at a astonishing rate giving us a clue that Demand is infact still outweighing the Supply of this Cryptocurrency, not to mention the Supply of Etheruem available for purchase on exchanges continues to dwindle.
The race is on for Ethereum to solve its Scalability issues and if that happens before competitors gain ground (other cryptocurrencies that have similar functions with cheaper fee structures) then I believe Ethereum will dominate the market, even more so considering that the way Ethereum works is going to be changed in a way that decreases inflation.
The image below shows there are many different solutions to the Ethereum scalability issue in the works, and eventually this issue will be non existent.
Credit to Messari for this image:
messari.s3.amazonaws...01 at 9.41.17 AM.png
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Data Overview:
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Now that I have given you a introduction to Ethereum, its problem and its solution let me show you some of the interesting data we can see live from the Blockchain & the Internet, dont forget that Cryptocurrencies are usually fully transparent giving traders and investors extra advantages to follow where the BIG MONEY is.
Coin Metrics:
Coin Metrics, information about the design and supply of the cryptocurrency. It is extremely useful for research purposes and to understand how each particular cryptocurrency differs from one and another.
Credit: messari.io/asset/ethereum/metrics
Marketcap Dominance Percent
The marketcap dominance is the asset's percentage share of the total circulating marketcap for all crypto assets.
Ethereum controls 14.68% of the total Crypto Market currently.
This is important because as the Dominance of Ethereum grows it shows us that it is taking up more and more of the market share and gaining stength.
Reported Marketcap
The Reported Market Capitalization of an asset is defined as the reported supply times the current price.
The total market cap of Ethereum is estimated at $303,123,218,229.
Market Cap is important because it allows us to gouge potential futures prices, if Ethereum is currently $2600 with a Market Cap of $303.123 Billion then as a rough calculation/estimation. For example, we can expect a price of around $5000 (double current price and market cap) with a Market Cap of $600 Billion.
Reported Supply
Reported Supply is the supply amount commonly reported in the industry.
The Supply of Ethereum is estimated to be 114,690,239 tokens.
Supply is important because if a token has a infinite or extremely large supply it can be seen as a "low value" coin. Ethereum Supply is not crazy large, which gives it potential to grow further then other tokens, see below for more info.
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On Chain Data:
On chain data is live information a cryptocurrency on the Blockchain. It is extremely useful for research purposes.
Ethereum 2 Dashboard By CryptoQuant:
This dashboard shows data delated to ETH 2.0
cryptoquant.com/overview/eth2
New Depositors:
This chart shows us that the amount of new depositors to the ETHEREUM 2.0 Contract is increasing, showing demand is in fact not slowing down.
cryptoquant.com...erview/full/602?window=day...
Ethereum Reserve on Exchanges:
This chart shows us the clear inverse correlation between the price of Ethereum and the Reserve Supply on Cryptocurrency Exchages, the supply continues to dwindle while Ethereum increases in value at a fast pace.
From CryptoQuant: ibb.co/yFrt9KM
Ethereum Transactions Skyrocket:
In January Ryan Watkins outlined: "ETH now settles $12 billion in transactions daily - $3 billion more than Bitcoin." This was a good sign that the Demand for Ethereum was not slowing down and continues to grow to this day.
twitter.com/RyanWatk...824961077249/photo/1
Ethereum Transaction Fees Surpass Bitcoin:
"Although Ethereum fees have “flipped” Bitcoin’s in the past, the most recent one is interesting because it's both more sustained and more utility driven."
messari.io/article/e...es-surpass-bitcoin-s
Ethereum Binance Outflow:
This chart shows that there has recently been a large spike in the amount of Ethereum being sent off the Binance exchange, although this is highly speculative it is a good sign that on a recent decrease in value the price quickly recovered and many tokens were sent off exchange (a potential sign of storage in personal wallet instead of the exchange account for long term holding).
From CryptoQuant: ibb.co/Tw4zC6G
Age of Ethereum Held:
markets.chainalysis.com/?range=180&...
Age is the time an asset is held by an entity. The longer an asset is held, the more likely it is that holders are using the asset as a store of value or are inactive.
In the last 180 days.
Wallets aged 0-2 weeks have increased by 15%.
Wallets ages 2-52 weeks have increased by 13.8%.
Wallets aged 52 weeks+ have decreased by 11.3%.
This shows us increased demand in the Cryptocurrency from retail users potentially, a small decrease in long term holders over the last 180 days but in the last 30 days the wallets with 52+ weeks have ticked up 0.5% so this will be the important one to watch, if we see a substantial increase in this over the next month or two it will be a good sign long term holders has actually increased. As of now almost 44,000,000 Ethereum is held by Wallets aged 52 weeks or more showing a large % of the Ethereum supply is holding on not selling currently.
Cost Curve Analysis By Philip Gradwell:
twitter.com/philip_g...988559839237/photo/1
"The ETH market has changed radically in recent months, with a significant increase in the cost of acquisition for over 50 million ETH, out of a total supply of 115M. Support at $1,500 is particularly strong, with 33.3M ETH acquired above this level at a total cost of $58 billion." - Philip Gradwell
This shows us that Over $58 billion dollars of Ethereum was bought above the $1500 area, which will make this a important area for Prices to stay above to remain bullish (keep increasing in value).
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So as you can see MUCH of the data above points to:
-Increases in Demand not slowing
-Decreases in Supply not slowing
-More Money Flowing into Ethereum
-More Transactions and more users flowing into Ethereum
-More Big Buyers Looking to Accumulate Ethereum
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Understanding Supply & Demand, The Key to Investing in Cryptocurrencies
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For me the most important thing when analyzing Cryptocurrencies is Supply & Demand , when I refer to the term Supply & Demand in this idea I covering two different ideologies so to speak:
1. Supply & Demand , physical
When I am talking about "physical"; I am referring to the Supply (Total Supply of the asset available for purchase) and Demand (Current demand from buyers to purchase said asset). When the Demand of buyers outweighs the amount of the asset available on the market to sell (Supply) we can expect to see a increase in price.
2. Supply & Demand , historical
When I am talking about "historical"; I am referring to the areas marked on the price chart as blue Zones ( Supply & Demand Zones) marked as blue zones, a Demand Zone is a area on the chart where significant historical buy orders occurred preceding market reversal upwards, and a Supply Zone (Supply - Influx of sellers) is a area on the chart where significant historical sell orders occurred preceding downwards market reversal (Supply - Influx of sellers).
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1. Supply & Demand , physical
Above we talked about the Coin Metrics of Ethereum, well the coin metrics allows us to understand Physical Supply & Demand even further:
"Lower Supply + Increased Demand = Higher Prices"
Total Supply
Looking at the Physical Supply of Ethereum there is a estimated total of 114,690,239 tokens created on the Blockchain.
Market Cap
Looking at the current estimated Market Cap there is a estimated total of $303,123,218.
The current price of Ethereum is 2630$.
Market Cap % Total Supply = Current Price
$303,123,218 % 114,690,239 = 2640$ (I removed some decimal points for ease of calculation)
So as you can see, by taking the current Market Cap of $303 Billion and dividing it by the estimated Total Supply of 114,000,000 Ethereum we get the current price, using this we can get a ROUGH estimate of potential prices if the market cap were to increase... if you're still not catching on, this means that by referencing the market cap calculation we can see how viable it is for Ethereum to reach higher prices if the demand of buyers were to outweigh the available Supply of Ethereum on exchanges.
So if Ethereum can see its market cap double, prices of 5000$ or more are not unquestionable, we can also note that out of a supply of roughly 114 million token it seems only 20 million are left as reserve on exchanges, giving potential for a "liquidity crisis" scenario where big size investors simply cannot find sellers of the Cryptocurrency for large purchases.
Work has began of Ethereums next EIP1559 Upgrade:
www.trustnodes....nciled-for-july?fbclid=IwA...
"Meaning for the next couple of months, ethereans can look forward to the upgrade that burns about 15,000 eth a day, worth $40 million, so taking them out of the total supply."
Yes, starting soon 15,000 Ethereum a day will be taken out of the Total Supply. A burn is where a amount of the supply of a currency is permanently destroyed. Dont forget: Lower Supply + Increased Demand = Higher Prices, as a rule of thumb.
But will there be continued institutional demand for this Cryptocurrency token to help increase the prices?
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Enter Grayscale:
What is Grayscale?
Grayscale, is the world's largest bitcoin and cryptocurrency asset manager, and has had a major influence in propelling Bitcoin onto Wall Street.
New York-based Grayscale, owned by Barry Silbert's expanding Digital Currency Group, currently boasts over $40 billion in assets under management, and one IMPORTNT THING TO NOTE, is that during Bitcoins crazy Bull Run we saw Grayscale have a SIGNIFICANT effect on the crypto market by potentially being the front runner for Bitcoin/Crypto related ETF's:
Above I explained the importance of Supply & Demand in both respects, for comparison in Bitcoins instance the Demand (of Grayscale & other institutions) outweighed the Supply (Amount of Bitcoin available to purchase & being created (mined) and as a result we seen Bitcoin reach the price of $60,000+ Recently
And Ethereum still is not even well known in the institutional eyes, If we can start to see Grayscale & other large financial companies adding to their holdings once again then we have a potential sign of further price increases on the way.
Grayscale Ethereum Holdings (See Image):
ibb.co/j6fVSfs
www.bybt.com/Grayscale
This chart shows us that currently the amount of Ethereum in the Grayscale Trust has not increased as of late but if we watch this closely once it starts increasing it can potentially be a good sign for Ethereum.
So the point is that not much big things happen in this space without Grayscale having its hands inside the bucket, so pay attention to the holdings of the Grayscale Ethereum Trust as the rules of Supply & Demand tell us that large additions to their holdings usually precede a influx of retail demand.
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Some other important news supporting Ethereum in the long run potentially showing increases of Demand for the Cryptocurrency:
1. Grayscale mentioned in a Bloomberg interview that Ethereum is showing increased interest from Institutional Investors ( remember, Supply & Demand ! )
www.bloomberg.com/ne...rling-grayscale-says
2. Ethereum to settle 1.6 Trillion Transactions Annually (Demand Increasing)
www.cryptopolitan.co...trillion-in-q1-2021/
3. Visa Becomes First Major Payments Network to Settle Transactions in USD Coin on Ethereum Network (USDC coin is a Digital Version of the US Dollar which is run off the Ethereum network, visa using the Ethereum network is a great sign long term and shows institutional & retail demand is still here)
usa.visa.com/about-v...releaseId.17821.html
4. New Depositors (Mentioned Above):
This chart shows us that the amount of new depositors to the ETHEREUM 2.0 Contract is increasing, showing demand is in fact not slowing down.
cryptoquant.com...erview/full/602?window=day...
5. Institutional Interest in Ethereum at Unprecedented Levels, Says a Leading Crypto Investment Firm
The chief strategy officer at investment firm CoinShares, Meltem Demirors, has revealed institutional investor interest in the second-largest cryptocurrency Ethereum (ETH) is at levels that have never been seen before.
www.cryptoglobe.com/...pto-investment-firm/
6. Ethereum Sees massive issuance of Stablecoins on Blockchain
Just like the FED prints money for the American Economy, Stablecoins (Cryptocurrencies that represent a local currency such as USD, AUD, EURO) can be Created and issued and then are injected into the Cryptocurrency Ecosystem. This can act like a fuel before the fire, with massive demand of Stable coins to be used to purchase Cryptocurrencies showing before Bull Runs.
“One winner in the growth of stablecoins appears to be Ethereum, which recently reached value transfer parity with Bitcoin. Stablecoins now account for 80% of daily transfer value on Ethereum as it has proven to be the issuance platform of choice for new stablecoins.” - Messari
cryptoslate.com/ethe...-hits-record-number/
cryptoslate.com/wp-c...eParity-1024x576.jpg
All these above are great signs that there is still room in the future for the Demand to purchase Ethereum to grow.
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2. Supply & Demand , historical
Now that we have gone over the concept of PHYSICAL Supply & Demand, and we have a clear picture of how much DEMAND there is for Ethereum right now, lets go over the latter on the chart; on above chart you can see the transparent areas I have marked, each one is a Supply & Demand Zone, and when price revisits these areas it has a high probability of a strong reaction occurring. As a trader or investor we want to mark these areas on our chart as potential buy & sell areas.
On the current ETH chart we can see how the price has recently pierced through top of one of these transparent zones, the zone was drawn from the left from the previous point where the price of Ethereum reversed downwards. This particular zone is called a Orderblock & you can click the below image for more information on how to use this technique in your analysis. When the price moves through one Order Zone it has a high probability of moving like a magnet towards the next, if there is no additional order zones then we enter Price Discovery which is what Ethereum is currently doing.
Click on below image for Education on how to use Order Zones in your charts:
Just like how large amounts of a asset being bought up (Demand) can be a potential sign of a increase in value coming, a Demand Zone drawn on a Technical Analysis chart can show a POTENTIAL AREA where a increase in value can occur from. So the idea is to wait for the price to either; 1. come back to a Demand Zone for a buy opportunity, or 2. break through a current Supply Zone and then "flip" that area into a Demand Zone before moving towards the next Supply Area, this is a form of Price Action and can be referred to as a "Support & Resistance Flip".
In my Trading Plan for Ethereum these Supply & Demand zones as well as Fibonacci Levels (explained below) will be the key areas I am looking to DCA (Dollar Cost Average) into and out of a position. When a asset enters price discovery the Fibonacci Extension Tool becomes one of the only assets we can use to gauge potential Buy or Sell areas on the chart as we have no historic Supply & Demand areas left to work with.
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Fibonacci Levels as Speculative Supply & Demand Areas:
Using the Fibonacci Tool:
The Fibonacci tool is usually drawn from one key swing point to another - and gives us potential key levels to watch. It is quite common for the price to come up to the 0.618 Fibonacci and decrease in value, rejecting from there, with the latter being a bounce from the 0.382 Fibonacci level before a upmove.
The Fibonacci tool is basically a mathematical equation that gives us important areas marked as lines on the chart, it is common for the price to reach these areas before reversing in the other direction, or piercing through them and confirming "Support" before continuing to the next Fibonacci level.
We drag the Fibonacci Retracement tool from different major swing high to swing low points, then double click on it to add our Extension levels.
-Price often has a thrust towards the 1.272 or other .272, .382, .618 extensions before a rejection occurs
The .618 Fibonacci ratio is referred to as the "Golden Ratio" there is a special relationship between the Golden Ratio and Fibonacci Numbers (0, 1, 1, 2, 3, 5, 8, 13, 21, ... etc, each number is the sum of the two numbers before it). So, just like we naturally get seven arms when we use 0.142857 (1/7), we tend to get Fibonacci Numbers when we use the Golden Ratio (.618, 1.618 etc) and traders are drawn towards these areas. We have marked the above extensions on the price chart so in the future we can see if we find potential trade opportunities off these important psychological areas, which become a form of Support & Resistance.
On this particular chart I have drawn the Fibonacci Tool from $1400-$80 and the $2050-$90 Swing High to Low areas with the 1.272, 1.382, 1.618, and further Extensions to get the PINK areas I am looking to DCA (Dollar Cost Average) out of a position at. For example if I had 5 Ethereum instead of selling all 5 at the first pink area I will sell 1 at each pink area allowing me to maximize my profits. This is just another way of "Buying Low & Selling High" by slowly laddering in and out of a position of a extended period of time.
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Conclusion:
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The above information gives me confidence and good clues that this token will continue to grow in value and usage of the next couple of years, even more so if Bitcoin continues to shine, and the problem of Scalability is solved (which there are many solutions already underway).
Using these tools I have defined some clear areas potentially allowing us to maximize profit potential for the long term. Although Ethereum may see "Overvalued" at $2600 I remind all readers that in 2017 The price of Ethereum increased from $140 to $1400 in roughly 5 months, and now the Crypto market is seeming even stronger then that period of time, giving a potential for massive increases here on the #2 Crypto token! Factoring in the reducing Supply over the next couple of months with increased instituional and retail interest. It is my personal opinion that Ethereum is the next biggest shot at financial freedom for many inside this DIGITAL GOLDRUSH! Goodluck.
If you found this idea informative and insightful, then show your appreciation by liking and commenting!
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Ethereum: A Brief Introduction & Background
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What is Ethereum:
White Paper (Info Doc):
github.com/ethereum/...iki/wiki/White-Paper
Website:
ethereum.org/en/
References:
messari.io/
www.bitdegree.org/
ethereum.org/en/
Ethereum is the community-run technology powering the cryptocurrency, ether (ETH) and thousands of decentralized applications.
Conception to token sale
Vitalik Buterin conceived Ethereum in 2013, after what he perceived as limitations in the functionality of Bitcoin’s scripting language, namely the lack of Turing completeness. Buterin published the first Ethereum white paper later that year, describing a distributed computing platform for executing smart contracts and building decentralized applications (dApps).
The rise of initial coin offerings (ICOs)
Ethereum's mainnet launched in July 2015, with the first live release known as Frontier. Shortly thereafter, Augur (REP) conducted the first Initial Coin Offering (ICO), in which the startup sold its Ethereum-based REP tokens (created via the ERC-20 standard) to help fund the project. The ability to develop and sell a newly generated token to help raise capital became an attractive method of fundraising because projects could circumvent the legal policies and costs required from traditional companies (until more recently). Ethereum-focused startups created thousands of new tokens since Augur's ICO, raising billions of dollars in the process.
Smart Contracts:
The Ethereum blockchain is designed so that transactions can only take place when certain conditions are met. The rules deciding these conditions are called ‘smart contracts’. It's an essential part of the what is Ethereum question.
Once one of these contracts is written, it can’t be changed. That’s why they are called ‘trustless’ transactions. You don’t need to trust individuals on the network — if the conditions of the contract aren’t met, then it won’t happen.
A trustless, fully transparent global network that never goes offline.
Decentralized Applications:
Decentralized applications (or ‘dApps’) are simply applications that do not run on a traditional central server. Instead, they run on a blockchain — which usually does not have a centralized point of authority or control.
Dapps are just like the variety of applications on your phone except Ethereum Dapps power a huge spectrum of activities in the Cryptocurrency world like digital loaning, providing liqudity, staking etc.
Ethereum has its own coding language called Solidity. Solidity is used to build dApps. Because Solidity is like JavaScript (one of the most common programming languages), it encourages developers to create new and exciting dApps.
The concept of Bitcoin is like digital money, but the Ethereum network is the powerhouse that fuels most of the backbone of the whole crypto market with many Stablecoins (the digital versions of FIAT Currencies like US Dollar, AUD, etc) and the Digital Economy are hosted on or linked to the Ethereum network, without this Crypto Trading & Defi (Decentralized Finance) would simply not be the same.
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The Situation:
A great explanation on the biggest present day problem affecting Ethereum by Messari Crypto is outlayed below.
"Ethereum supports an incredible amount of economic activity daily. It settles billions of dollars in transactions a day and runs tens of thousands of decentralized applications across its booming decentralized finance (DeFi) and non-fungible token (NFT) sectors. However, Ethereum blockspace is limited and all these applications compete for the same resources, meaning that transactions become more expensive and more delayed when the network is congested. Practically speaking for users, a smart contract transaction (e.g. Uniswap trade) on Ethereum could surpass hundreds of dollars depending on the congestion of the network, which results in prohibitively expensive interactions."
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Ethereum: The Rise to Power
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Overview of Fundamentals (Research about the Cryptocurrency Itself, NOT TECHNICAL ANALYSIS):
My personal thoughts.
In the past 4 years of my Cryptocurrency investing career I have seen Ethereum grow to become backbone of the whole Cryptocurrency market with many projects (Notably Defi & Stablecoins) being based off the Ethereum Network.
Even though the cryptocurrency has ridiculous fees data has shown that the amount of users and money flowing into this ecosystem continues to break records and increase at a astonishing rate giving us a clue that Demand is infact still outweighing the Supply of this Cryptocurrency, not to mention the Supply of Etheruem available for purchase on exchanges continues to dwindle.
The race is on for Ethereum to solve its Scalability issues and if that happens before competitors gain ground (other cryptocurrencies that have similar functions with cheaper fee structures) then I believe Ethereum will dominate the market, even more so considering that the way Ethereum works is going to be changed in a way that decreases inflation.
The image below shows there are many different solutions to the Ethereum scalability issue in the works, and eventually this issue will be non existent.
Credit to Messari for this image:
messari.s3.amazonaws...01 at 9.41.17 AM.png
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Data Overview:
------------------------------------------------------------------------------------------------
Now that I have given you a introduction to Ethereum, its problem and its solution let me show you some of the interesting data we can see live from the Blockchain & the Internet, dont forget that Cryptocurrencies are usually fully transparent giving traders and investors extra advantages to follow where the BIG MONEY is.
Coin Metrics:
Coin Metrics, information about the design and supply of the cryptocurrency. It is extremely useful for research purposes and to understand how each particular cryptocurrency differs from one and another.
Credit: messari.io/asset/ethereum/metrics
Marketcap Dominance Percent
The marketcap dominance is the asset's percentage share of the total circulating marketcap for all crypto assets.
Ethereum controls 14.68% of the total Crypto Market currently.
This is important because as the Dominance of Ethereum grows it shows us that it is taking up more and more of the market share and gaining stength.
Reported Marketcap
The Reported Market Capitalization of an asset is defined as the reported supply times the current price.
The total market cap of Ethereum is estimated at $303,123,218,229.
Market Cap is important because it allows us to gouge potential futures prices, if Ethereum is currently $2600 with a Market Cap of $303.123 Billion then as a rough calculation/estimation. For example, we can expect a price of around $5000 (double current price and market cap) with a Market Cap of $600 Billion.
Reported Supply
Reported Supply is the supply amount commonly reported in the industry.
The Supply of Ethereum is estimated to be 114,690,239 tokens.
Supply is important because if a token has a infinite or extremely large supply it can be seen as a "low value" coin. Ethereum Supply is not crazy large, which gives it potential to grow further then other tokens, see below for more info.
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On Chain Data:
On chain data is live information a cryptocurrency on the Blockchain. It is extremely useful for research purposes.
Ethereum 2 Dashboard By CryptoQuant:
This dashboard shows data delated to ETH 2.0
cryptoquant.com/overview/eth2
New Depositors:
This chart shows us that the amount of new depositors to the ETHEREUM 2.0 Contract is increasing, showing demand is in fact not slowing down.
cryptoquant.com...erview/full/602?window=day...
Ethereum Reserve on Exchanges:
This chart shows us the clear inverse correlation between the price of Ethereum and the Reserve Supply on Cryptocurrency Exchages, the supply continues to dwindle while Ethereum increases in value at a fast pace.
From CryptoQuant: ibb.co/yFrt9KM
Ethereum Transactions Skyrocket:
In January Ryan Watkins outlined: "ETH now settles $12 billion in transactions daily - $3 billion more than Bitcoin." This was a good sign that the Demand for Ethereum was not slowing down and continues to grow to this day.
twitter.com/RyanWatk...824961077249/photo/1
Ethereum Transaction Fees Surpass Bitcoin:
"Although Ethereum fees have “flipped” Bitcoin’s in the past, the most recent one is interesting because it's both more sustained and more utility driven."
messari.io/article/e...es-surpass-bitcoin-s
Ethereum Binance Outflow:
This chart shows that there has recently been a large spike in the amount of Ethereum being sent off the Binance exchange, although this is highly speculative it is a good sign that on a recent decrease in value the price quickly recovered and many tokens were sent off exchange (a potential sign of storage in personal wallet instead of the exchange account for long term holding).
From CryptoQuant: ibb.co/Tw4zC6G
Age of Ethereum Held:
markets.chainalysis.com/?range=180&...
Age is the time an asset is held by an entity. The longer an asset is held, the more likely it is that holders are using the asset as a store of value or are inactive.
In the last 180 days.
Wallets aged 0-2 weeks have increased by 15%.
Wallets ages 2-52 weeks have increased by 13.8%.
Wallets aged 52 weeks+ have decreased by 11.3%.
This shows us increased demand in the Cryptocurrency from retail users potentially, a small decrease in long term holders over the last 180 days but in the last 30 days the wallets with 52+ weeks have ticked up 0.5% so this will be the important one to watch, if we see a substantial increase in this over the next month or two it will be a good sign long term holders has actually increased. As of now almost 44,000,000 Ethereum is held by Wallets aged 52 weeks or more showing a large % of the Ethereum supply is holding on not selling currently.
Cost Curve Analysis By Philip Gradwell:
twitter.com/philip_g...988559839237/photo/1
"The ETH market has changed radically in recent months, with a significant increase in the cost of acquisition for over 50 million ETH, out of a total supply of 115M. Support at $1,500 is particularly strong, with 33.3M ETH acquired above this level at a total cost of $58 billion." - Philip Gradwell
This shows us that Over $58 billion dollars of Ethereum was bought above the $1500 area, which will make this a important area for Prices to stay above to remain bullish (keep increasing in value).
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So as you can see MUCH of the data above points to:
-Increases in Demand not slowing
-Decreases in Supply not slowing
-More Money Flowing into Ethereum
-More Transactions and more users flowing into Ethereum
-More Big Buyers Looking to Accumulate Ethereum
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Understanding Supply & Demand, The Key to Investing in Cryptocurrencies
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For me the most important thing when analyzing Cryptocurrencies is Supply & Demand , when I refer to the term Supply & Demand in this idea I covering two different ideologies so to speak:
1. Supply & Demand , physical
When I am talking about "physical"; I am referring to the Supply (Total Supply of the asset available for purchase) and Demand (Current demand from buyers to purchase said asset). When the Demand of buyers outweighs the amount of the asset available on the market to sell (Supply) we can expect to see a increase in price.
2. Supply & Demand , historical
When I am talking about "historical"; I am referring to the areas marked on the price chart as blue Zones ( Supply & Demand Zones) marked as blue zones, a Demand Zone is a area on the chart where significant historical buy orders occurred preceding market reversal upwards, and a Supply Zone (Supply - Influx of sellers) is a area on the chart where significant historical sell orders occurred preceding downwards market reversal (Supply - Influx of sellers).
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1. Supply & Demand , physical
Above we talked about the Coin Metrics of Ethereum, well the coin metrics allows us to understand Physical Supply & Demand even further:
"Lower Supply + Increased Demand = Higher Prices"
Total Supply
Looking at the Physical Supply of Ethereum there is a estimated total of 114,690,239 tokens created on the Blockchain.
Market Cap
Looking at the current estimated Market Cap there is a estimated total of $303,123,218.
The current price of Ethereum is 2630$.
Market Cap % Total Supply = Current Price
$303,123,218 % 114,690,239 = 2640$ (I removed some decimal points for ease of calculation)
So as you can see, by taking the current Market Cap of $303 Billion and dividing it by the estimated Total Supply of 114,000,000 Ethereum we get the current price, using this we can get a ROUGH estimate of potential prices if the market cap were to increase... if you're still not catching on, this means that by referencing the market cap calculation we can see how viable it is for Ethereum to reach higher prices if the demand of buyers were to outweigh the available Supply of Ethereum on exchanges.
So if Ethereum can see its market cap double, prices of 5000$ or more are not unquestionable, we can also note that out of a supply of roughly 114 million token it seems only 20 million are left as reserve on exchanges, giving potential for a "liquidity crisis" scenario where big size investors simply cannot find sellers of the Cryptocurrency for large purchases.
Work has began of Ethereums next EIP1559 Upgrade:
www.trustnodes....nciled-for-july?fbclid=IwA...
"Meaning for the next couple of months, ethereans can look forward to the upgrade that burns about 15,000 eth a day, worth $40 million, so taking them out of the total supply."
Yes, starting soon 15,000 Ethereum a day will be taken out of the Total Supply. A burn is where a amount of the supply of a currency is permanently destroyed. Dont forget: Lower Supply + Increased Demand = Higher Prices, as a rule of thumb.
But will there be continued institutional demand for this Cryptocurrency token to help increase the prices?
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Enter Grayscale:
What is Grayscale?
Grayscale, is the world's largest bitcoin and cryptocurrency asset manager, and has had a major influence in propelling Bitcoin onto Wall Street.
New York-based Grayscale, owned by Barry Silbert's expanding Digital Currency Group, currently boasts over $40 billion in assets under management, and one IMPORTNT THING TO NOTE, is that during Bitcoins crazy Bull Run we saw Grayscale have a SIGNIFICANT effect on the crypto market by potentially being the front runner for Bitcoin/Crypto related ETF's:
Above I explained the importance of Supply & Demand in both respects, for comparison in Bitcoins instance the Demand (of Grayscale & other institutions) outweighed the Supply (Amount of Bitcoin available to purchase & being created (mined) and as a result we seen Bitcoin reach the price of $60,000+ Recently
And Ethereum still is not even well known in the institutional eyes, If we can start to see Grayscale & other large financial companies adding to their holdings once again then we have a potential sign of further price increases on the way.
Grayscale Ethereum Holdings (See Image):
ibb.co/j6fVSfs
www.bybt.com/Grayscale
This chart shows us that currently the amount of Ethereum in the Grayscale Trust has not increased as of late but if we watch this closely once it starts increasing it can potentially be a good sign for Ethereum.
So the point is that not much big things happen in this space without Grayscale having its hands inside the bucket, so pay attention to the holdings of the Grayscale Ethereum Trust as the rules of Supply & Demand tell us that large additions to their holdings usually precede a influx of retail demand.
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Some other important news supporting Ethereum in the long run potentially showing increases of Demand for the Cryptocurrency:
1. Grayscale mentioned in a Bloomberg interview that Ethereum is showing increased interest from Institutional Investors ( remember, Supply & Demand ! )
www.bloomberg.com/ne...rling-grayscale-says
2. Ethereum to settle 1.6 Trillion Transactions Annually (Demand Increasing)
www.cryptopolitan.co...trillion-in-q1-2021/
3. Visa Becomes First Major Payments Network to Settle Transactions in USD Coin on Ethereum Network (USDC coin is a Digital Version of the US Dollar which is run off the Ethereum network, visa using the Ethereum network is a great sign long term and shows institutional & retail demand is still here)
usa.visa.com/about-v...releaseId.17821.html
4. New Depositors (Mentioned Above):
This chart shows us that the amount of new depositors to the ETHEREUM 2.0 Contract is increasing, showing demand is in fact not slowing down.
cryptoquant.com...erview/full/602?window=day...
5. Institutional Interest in Ethereum at Unprecedented Levels, Says a Leading Crypto Investment Firm
The chief strategy officer at investment firm CoinShares, Meltem Demirors, has revealed institutional investor interest in the second-largest cryptocurrency Ethereum (ETH) is at levels that have never been seen before.
www.cryptoglobe.com/...pto-investment-firm/
6. Ethereum Sees massive issuance of Stablecoins on Blockchain
Just like the FED prints money for the American Economy, Stablecoins (Cryptocurrencies that represent a local currency such as USD, AUD, EURO) can be Created and issued and then are injected into the Cryptocurrency Ecosystem. This can act like a fuel before the fire, with massive demand of Stable coins to be used to purchase Cryptocurrencies showing before Bull Runs.
“One winner in the growth of stablecoins appears to be Ethereum, which recently reached value transfer parity with Bitcoin. Stablecoins now account for 80% of daily transfer value on Ethereum as it has proven to be the issuance platform of choice for new stablecoins.” - Messari
cryptoslate.com/ethe...-hits-record-number/
cryptoslate.com/wp-c...eParity-1024x576.jpg
All these above are great signs that there is still room in the future for the Demand to purchase Ethereum to grow.
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2. Supply & Demand , historical
Now that we have gone over the concept of PHYSICAL Supply & Demand, and we have a clear picture of how much DEMAND there is for Ethereum right now, lets go over the latter on the chart; on above chart you can see the transparent areas I have marked, each one is a Supply & Demand Zone, and when price revisits these areas it has a high probability of a strong reaction occurring. As a trader or investor we want to mark these areas on our chart as potential buy & sell areas.
On the current ETH chart we can see how the price has recently pierced through top of one of these transparent zones, the zone was drawn from the left from the previous point where the price of Ethereum reversed downwards. This particular zone is called a Orderblock & you can click the below image for more information on how to use this technique in your analysis. When the price moves through one Order Zone it has a high probability of moving like a magnet towards the next, if there is no additional order zones then we enter Price Discovery which is what Ethereum is currently doing.
Click on below image for Education on how to use Order Zones in your charts:
Just like how large amounts of a asset being bought up (Demand) can be a potential sign of a increase in value coming, a Demand Zone drawn on a Technical Analysis chart can show a POTENTIAL AREA where a increase in value can occur from. So the idea is to wait for the price to either; 1. come back to a Demand Zone for a buy opportunity, or 2. break through a current Supply Zone and then "flip" that area into a Demand Zone before moving towards the next Supply Area, this is a form of Price Action and can be referred to as a "Support & Resistance Flip".
In my Trading Plan for Ethereum these Supply & Demand zones as well as Fibonacci Levels (explained below) will be the key areas I am looking to DCA (Dollar Cost Average) into and out of a position. When a asset enters price discovery the Fibonacci Extension Tool becomes one of the only assets we can use to gauge potential Buy or Sell areas on the chart as we have no historic Supply & Demand areas left to work with.
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Fibonacci Levels as Speculative Supply & Demand Areas:
Using the Fibonacci Tool:
The Fibonacci tool is usually drawn from one key swing point to another - and gives us potential key levels to watch. It is quite common for the price to come up to the 0.618 Fibonacci and decrease in value, rejecting from there, with the latter being a bounce from the 0.382 Fibonacci level before a upmove.
The Fibonacci tool is basically a mathematical equation that gives us important areas marked as lines on the chart, it is common for the price to reach these areas before reversing in the other direction, or piercing through them and confirming "Support" before continuing to the next Fibonacci level.
We drag the Fibonacci Retracement tool from different major swing high to swing low points, then double click on it to add our Extension levels.
-Price often has a thrust towards the 1.272 or other .272, .382, .618 extensions before a rejection occurs
The .618 Fibonacci ratio is referred to as the "Golden Ratio" there is a special relationship between the Golden Ratio and Fibonacci Numbers (0, 1, 1, 2, 3, 5, 8, 13, 21, ... etc, each number is the sum of the two numbers before it). So, just like we naturally get seven arms when we use 0.142857 (1/7), we tend to get Fibonacci Numbers when we use the Golden Ratio (.618, 1.618 etc) and traders are drawn towards these areas. We have marked the above extensions on the price chart so in the future we can see if we find potential trade opportunities off these important psychological areas, which become a form of Support & Resistance.
On this particular chart I have drawn the Fibonacci Tool from $1400-$80 and the $2050-$90 Swing High to Low areas with the 1.272, 1.382, 1.618, and further Extensions to get the PINK areas I am looking to DCA (Dollar Cost Average) out of a position at. For example if I had 5 Ethereum instead of selling all 5 at the first pink area I will sell 1 at each pink area allowing me to maximize my profits. This is just another way of "Buying Low & Selling High" by slowly laddering in and out of a position of a extended period of time.
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Conclusion:
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The above information gives me confidence and good clues that this token will continue to grow in value and usage of the next couple of years, even more so if Bitcoin continues to shine, and the problem of Scalability is solved (which there are many solutions already underway).
Using these tools I have defined some clear areas potentially allowing us to maximize profit potential for the long term. Although Ethereum may see "Overvalued" at $2600 I remind all readers that in 2017 The price of Ethereum increased from $140 to $1400 in roughly 5 months, and now the Crypto market is seeming even stronger then that period of time, giving a potential for massive increases here on the #2 Crypto token! Factoring in the reducing Supply over the next couple of months with increased instituional and retail interest. It is my personal opinion that Ethereum is the next biggest shot at financial freedom for many inside this DIGITAL GOLDRUSH! Goodluck.
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Comment:
More positive news, And approaching $3000 region now
www.cnbc.com/2021/04...its-record-high.html
the European Investment Bank announced Wednesday that it had issued its first ever digital bond on the Ethereum blockchain, ether’s underlying network. This led to speculation that the currency is gaining traction among mainstream financial institutions.
www.cnbc.com/2021/04...its-record-high.html
the European Investment Bank announced Wednesday that it had issued its first ever digital bond on the Ethereum blockchain, ether’s underlying network. This led to speculation that the currency is gaining traction among mainstream financial institutions.
Comment:
Ethereum breaks $3000! Congratulations holders :)
Looks like we are just getting started here
Looks like we are just getting started here
Comment:
Dont forget the DCA Strategy ;)
In the above image Higher Highs & Higher Lows (HH, HL) are mentioned.
Click for a further understanding of this concept here: