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Ethereum seems as though it has been fairly bullish over the last few weeks, so let’s do a thorough price analysis on what’s going on and review some of the issues/benefits that the currency has faced during this time as well.
In addition, there will be a retroactive and forward looking fundamental, sentiment, chart and technical analysis contained within this market report as well.
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Table of Contents
1 — Fundamental Analysis
2 — Sentiment Analysis
3 — Chart Analysis
4 — Technical Analysis
5 — Conclusion/Final Thoughts
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#1 — Fundamental Analysis
Rolling back, there has been a slew of positive news that has come out about Ethereum specifically.
The first of which is:
Introducing AWS Blockchain Templates
There was also some very bullish news that came from the CME (Chicago Mercantile Exchange; U.S. Futures Exchange that launched BTC futures on Dec. 17th).
From the article:
The publication, “The Merkle”, provides a more tempered reflection of the CME listing of Ethereum Indexes (not futures…yet).
From the article:
More recently, it appears that China released a series of reviews on the ‘top’ cryptocurrencies (haven’t confirmed the veracity of this report personally), that appears to list Ethereum.
You may ask, ‘Why include this, if you haven’t confirmed the report?’
Great question. I have done so because this is a fundamental analysis, and if the market believes that it is true, it doesn’t matter whether it really is true or not because the market will react to it as if it is valid.
If anything, this signals that the importance of Ethereum is starting to rise substantially. It’s market cap and its growth in relation to BTC has grown as well. Check out the ETH/BTC chart below:
However, there has been some negative information (albeit weird, yet serious) that has come out about Ethereum, bringing up classic concerns about the chain’s ability to scale to the forefront once again:
The picture above corroborates the idea that these recent additions to the Ethereum blockchain have added a considerable amount of total TX to the protocol.
We know from reports in December that Cryptokitties essentially crippled the entire blockchain a few months ago:
Looks like there has been a 50% spike in TX fees as well, making the story even more plausible:
So, from everything that I’m observing, the claim that there are at least a few games/memes/nazi frogs/whatever polluting the chain is probably legitimate, which yields credence to the growing concern of individuals that have been covering/following the Ethereum platform that claim that its current state is insufficient to accommodate any type of grand scaling — even with sharding.
Weirdly enough, it appears that this is not Ethereum’s only run in with Nazi sentiment (really):
Obviously, this does not speak to Vitalik’s personal preferences, the Ethereum blockchain’s inherent design/nature, or even to the general political beliefs of those that frequently use the Ethereum blockchain for legitimate purposes. However, there does seem to be some sort of weird fixation/affinity that neo-Nazis have with Ethereum, which is something that’s hard to understand.
Here are some other topological stats that are of note:
#2 — Sentiment Analysis
The data here shows an overall increase hourly for Ethereum sentiment. The hourly tweet volume for Ethereum is up, however the daily tweet volume dropped substantially over the last day or so. This has not affected the sentiment, as tracked by the BittsAnalytics indicator, which indicates that it is up overall for Ethereum.
This stands in stark contrast to the data presented by Google Trends* however (shown later).
As you can see from the Google Trend data above, the search/interest data for the currency has dropped 25% in the last week, continuing its steep downtrend since it reached its top in January (where you see those two peaks.
#3 — Chart Analysis
As mentioned earlier within this analysis, the appreciation of Ethereum against BTC (Bitcoin) has been remarkable.
As shown above, there has been considerable price action within Ethereum since April.
1. The first item of note is the fact that the long-term downtrend for Ethereum against BTC began in June 2017. However, this was not a fact that was widely noticed because the price of Ethereum was increasing along with Bitcoin. It was just doing so at a much slower rate than Bitcoin.
a. The period of time that we are currently in is only the second time in Ethereum’s history that it has strongly appreciated against Bitcoin after it has been ‘established’ as a crypto.
2. This long-term downtrend from that June 2017 decline against Bitcoin was broken in late December 2017 and the run up lasted throughout Ethereum’s massive bull-run, which occurred primarily in January.
3. Its period of consolidation formed what we call a ‘bull flag’, which is a bullish continuation pattern.
4. There was a noticeable breakout from that bull flag in early April of this year (last month from the time of writing).
As you can see here (Fibs aren’t perfect and the levels do not always guarantee that they will hold as resistance/support points), Ethereum has adhered to the Fib levels for the most part.
There are a few places where it doesn’t hold firmly or the price breaks straight through or below a Fib level, which is always a super bullish/bearish sign when it occurs.
Check out all of the pivot points that occurred for ETH’s Fib Chart.
It appears that Ethereum is headed toward being valued at .093824 BTC per ETH, which would value the currency at $778 per Ethereum given the current market price of Bitcoin. This would be an approximate 10% increase on Ethereum’s current price at the time of writing ($702).
#4 — Technical Analysis
The first indicator of note on Ethereum is its volume, which has remained relatively flat from the period of February 9th to present day (May 19th, 2018).
As seen on the chart above, it appears as though the volume decreased substantially after the Ethereum/BTC peak was reached at that point. There was then a subsequent and substantial spike in sell volume that occurred shortly after, which pronounced the beginning of Ethereum’s consolidation into a bull pennant formation.
Moving Average Indicators
The EMA-50 and EMA-200 formed a golden cross on the 1D chart for the ETH/BTC pairing on May 4th, 2018.
Since the price has surpassed both the EMA-50 & 200, they will each serve as support points as needed.
1. The conversion line (blue) crossed the base line (red) occurred on April 14th, 2018, on the daily. Another bullish signal is the fact that both lines also crossed below the price in and around the same time.
2. The price elevated above the “cloud” (major bullish signal) on May 3rd, 2018.
CM Super Guppy
Above is the CM Super Guppy Indicator.
This is an aggregate of a bunch of different MA indicators as well. The grey area means that there is ambivalence/pending change in the direction or price action/color of the waves (notice how some are red or green).
Currently, the CM Super Guppy is showing green, which is bullish. Positive sign for bulls.
The analysis on the chart above for VPVR speaks for itself in many ways.
This is another custom indicator that was made by users on TradingView via PineScript. Pretty straightforward in nature.
This is yet another indicator that speaks for itself. As the line goes up, that indicates greater accumulation, as it moves downward, it indicates greater distribution of the currency.
The fact that the indicator has gone up while the volume has been low in addition to the price going up as well:
Shows that there is more than likely a mass accumulation by players in the market that can more than likely be classified as ‘whales’ rather than regular buyers.
This is assumed because regular buyers would not have the ability spur on such price action with low value trades.
Relative Strength Index
The RSI has been on a rocket ship since March 29th, where it was severely oversold.
Now, the price has been floating around and above the overbought territory for some time at this point. However, that does not necessarilymean that there is an impending price reversal on its way.
Prices can remain overbought or oversold for as long as they need be. It’s a bit harder to catch exhaustion at the earliest possible moment (unless you have a momentum indicator applied to the RSI to observe its momentum) because RSI is range-bounded (0 to 100).
Also, the data is a bit hard to interpret at times due to the fluctuations in values presented, so an MA indicator was applied to the RSI in order to give secondary confirmation results on the movement of RSI as a standalone indicator.
Below shows the results:
The blue line = EMA(9)[RSI(14)]
The pink line = RSI(14)
RSI(14)>EMA(9)[RSI(14)] = buy signal
EMA(9)[RSI(14)]>RSI(14) = sell signal
Rate of Change
The benefits of the Rate of Change indicator here (applied to RSI) is that it allows us to see the rate of increase or decrease in the RSI on a 5 period over 5 period basis.
The periods are intentionally framed to be tight (only 5 periods) in order to truck some of them ore micro-fluctuations that may occur.
Currently, the RoC(5)[RSI(14)] is reflecting a strong negative bias in the rate of increase of the RSI.
It appears as though Ethereum will continue to appreciate against Bitcoin in the coming days or perhaps over the next few weeks. In the opinion of the study’s authors, it seems plausible, if not very likely that the price will continue to increases (with the slight pullbacks as expected) for the next few days/weeks/etc.
I personally believe that Ethereum is becoming increasingly decoupled with Bitcoin and that the Flippening will be coming sooner or later.