ETHEREUM - MAJOR CORRECTION UNDERWAY
Updated
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.
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.
Note
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 ETH market is super-fragile.
Trade closed manually
Correction over.
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