Ethereum 2.021 Prediction #79

Market Meditations | January 20, 2021

In today’s letter, we provide key technical and fundamental analysis on $ETH. 

Dear Meditators

A lot has been happening this week. In particular, Ethereum caught our eye ?

In today’s letter, we provide key technical and fundamental analysis on $ETH

If you have skin in the game, do not miss this one. 

As always, if you enjoy this letter, be sure to share it with your network. Let’s all grow richer together.



  • Goldman Sachs Can No Longer Dismiss Bitcoin ?
    Over the last year, many traditional financial institutions have recanted previous skepticism to join the bitcoin space. For most of that time, Goldman Sachs has been a noticeable holdout, saying as recently as last May that bitcoin and cryptocurrency weren’t an asset class. According to new reports from a Goldman insider, all that is finally changing as the bank prepares a crypto custody strategy. Read more.

  • Firo Becomes Latest Coin To Suffer 51% Attack ?
    Privacy-focused digital currency, Firo, formerly known as Zcoin, suffered a 51% attack in the early hours of 20 January. Taking to Twitter, the team behind Firo notified traders about the attack and asked users not to make transactions until the network returned to a normal state. At the same time, CEO of Binance, Changpeng Zhao (CZ) stated that the miner behind the attack rolled back 306 blocks, which stopped on-chain transactions at the time. Read more.

  • Coinbase To Acquire Bison Trails ?
    Coinbase is acquiring crypto infrastructure provider Bison Trails in a move that the San Francisco-based exchange-operator says will help it expand into a growing corner of the crypto market: infrastructure as a service. The announcement comes just weeks after Coinbase announced the acquisition of Routefire, an execution services startup. Read more.

  • Rick And Morty Crypto Art Sells for $150,000 ?
    A crypto art piece by Justin Roiland, co-creator of the famous animated series Rick and Morty, has sold for a handsome price on non-fungible token marketplace Nifty Gateway. Dubbed “The First Ever Edition Of Rick And Morty Cryptoart,” the tokenized artwork was sold at silent auction for $150,000. Crypto NFTs have been steadily gaining momentum in recent months, bringing famous creators and artists a new opportunity to sell their pieces directly to their fans. Read more.

  • Yellen Says Cryptocurrencies Are a ‘Concern’ in Terrorist Financing ?
    Cryptocurrencies are “a particular concern” when it comes to terrorist financing, potential Treasury Secretary Janet Yellen said Tuesday. Speaking at a Senate Finance Committee hearing on her anticipated nomination after President-elect Joe Biden takes office tomorrow, Yellen said the U.S. should be aware of emerging tools for terrorist financing. Read more.


Ethereum 2.021 Prediction

Twitter showed signs of euphoria yesterday when Ethereum finally managed to make a new all-time high, 3 years after prices topped at around ~$1420 in January 2018.

The happiness was short-lived and Ethereum was rejected soon after, with prices currently almost 10% lower than they were yesterday. 

Still, the vast majority of people believe that a new Ethereum all-time high is simply a matter of time, especially given the DeFi activity on Ethereum this year. 

For this article, I start by looking at some technical analysis for Ethereum and explain what the charts are telling us. Later, I zoom in on some fundamentals and why they are hinting at higher prices for Ethereum soon. 


What Does The Ethereum Chart Tell Us?

Let’s start off with ETH/BTC. 

The ETH/BTC bottom and subsequent breakout was one for the books.

I wrote about this pair multiple times as it is a very reliable indicator for altcoin strength vs. Bitcoin.

ETH/BTC painted a nice double bottom before really showing momentum, and after breaking 0.027BTC prices exploded upwards

The moment that level broke, we had a higher high on high time frames indicating that Ethereum would outperform bitcoin for the foreseeable future, until the trend gets invalidated again.

After a brief consolidation period following that first big impulse move from the bottom, ETH/BTC broke out again yesterday resulting in a new all-time high on the USD chart. 

Funding rates for both Bitcoin and Ethereum were high across the board but as Mohit Sorout (Founding partner @ Bitazu Capital) pointed out, funding rates alone are not a reliable indicator for possible reversals on the Ethereum chart. Was this time different?

Moving on to ETH/USD. 

ETH/USD did not manage to hold yesterday’s breakout and corrected further this morning when Bitcoin broke below $35000.

While we did lose the key psychological level at $1300 a (short-term) sign of weakness, we have seen a perfect bounce at the multi confluent $1250 level. Bulls are still in control.

All time high breaks are difficult to trade. Here’s the scenario we often see play out after a failed breakout in a macro bull market.

  • One or two sharp dip to take out over-leveraged longs. So be prepared for another.

  • Then continuation of the uptrend.

Don’t get caught off guard, take advantage of our experience.


So You Told Me The Technicals, What About The Fundamentals?


ETH’s robust fundamentals including ETH 2.0, the launch of CME Futures, and a few supporting on-chain metrics, suggest that ETH may catapult into price discovery sooner rather than later

1) ETH 2.0

Ethereum recently launched the first phase of its long awaited upgrade: ETH 2.0 (also known as Serenity). Designed to improve the speed, scalability, and efficiency of the Ethereum network. 

Ethereum 2.0 moves from a Proof of Work to Proof of Stake model. Put simply, if you want to add blocks on the blockchain, all you have to do is “stake” or lock up your ETH. Staking is a scarcity mechanism resulting in less $ETH on the market available to sell. 

This tweet from Spencer Noon demonstrates that more than $740 million worth of ETH was removed from exchanges just last week whilst $2.57 million worth of ETH has been sent to the Ethereum 2.0 deposit contract

We know price is a function of supply and demand. When ETH is staked and removed from exchanges, the total “sellable” supply of ETH continues to decrease.Laws of economics tell us that when supply is removed from circulation the price of the asset will increase if the demand is present. 

2) CME Futures 

It’s quite likely that the launch of a CME futures contract will provide a huge catalyst for increased demand in ETH in the short term. In a letter to investors, Pantera capital writes:

Once CME ETH futures launch, it legitimizes Ethereum as something institutional investors can own.” 

A CME futures contract makes it possible for some of the world’s largest and well known institutions to purchase ETH in a familiar and regulated manner. 

3) DeFi Boom

In addition, the entire DeFi movement—which aims to recreate traditional financial instruments such as banking, lending, marketplaces, etc—is being built on the Ethereum ecosystem

This next tweet from Spencer Noon indicates that there are now more than 1.25 million DeFi users, a number that is growing parabolically. 

On-chain metrics like these make it clear that the supply of ETH is rapidly shrinking whilst demand seems to be increasing. It seems that what we have on our hands is the classic economic formula for price appreciation.

Conclusion

Ethereum finally managed to make a new all-time high, 3 years after prices topped at around ~$1420 in January 2018. The happiness was short-lived and Ethereum was rejected soon after, with prices currently almost 10% lower than they were yesterday. We have covered key technical analysis to explore this price action. Still, the vast majority of people believe that a new Ethereum all-time high is simply a matter of time. In today’s letter, we have described how the fundamentals support this view. ETH 2.0, CME Futures and the Supply/Demand factors associated with them bode well for Ethereum.


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Let’s take an example.

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How Does Utrust Work?

1. You integrate Utrust into your payment processing system. Utrust has seamless integration so you don’t have to wait and can set this up even if you’re not crypto savvy.

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Is Utrust for You?

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Notsofast: Taking Profit on Bitcoin in 2021

CLICK HERE FOR EARLY ACCESS

Notsofast (@notsofast) is a well-respected crypto OG who has been active in crypto since 2014. He is known for his wealth of knowledge on mining, security & privacy and macro trends in crypto. 

Things I learned:

  1. A lot of new traders have a short term mindset that is often taken advantage of by bad actors or people with more experience.

  2. Lifestyle inflation is a big problem for some traders without them even realizing it. As people start to make more money, people start spending more which often sneaks up on them when they go through a drawdown. Keep your expenses low.

  3. Self sufficiency is really important in trading. Asking for outside capital can be tempting but is almost never worth it. Taking risks with your own money is not the same as other people’s money.

  4. Trading against the higher time frame trend reduces the probability of your setup while increasing the mental load on your psychology as well. In trading, generally try keeping things as simple as possible.

  5. Selling small amounts all the time while still keeping a lot can be a great tool to manage your psychology. 

  6. A big part of trading is figuring out what works for you. Look for minimal cost, minimal risk while maximizing upside.

  7. There is a dynamic in infosec that is all over the place. The scammers and/or thieves are always one slight step ahead of everybody’s protective measures.

  8. If you get rich from cryptocurrencies, the best is doing it in a way that nobody knows. 


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Disclaimer: The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. I am not a financial advisor. Every investment and trading move involves risk. Do your own research when making a decision. 


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