While everybody is pre-occupied waiting to see what Bitcoin will do, I find that it is Ethereum which I cannot keep out of my mind. Despite the fact that I remain bearish on Bitcoin in the short and medium term, when I look at the Ethereum charts I can't help but see a vastly different chart.
Bearish on Bitcoin
I've said it over and over by now but I still am convinced that we will see a breakdown in the price of Bitcoin sooner or later and I fully expect to see a Bitcoin below $5000 and perhaps even much lower even in the next half year or so. I base my predictions for a large part on the Logarithmic scale price charts which I feel portrays a more accurate picture of price development. For reference's sake I will re-post the chart I posted a while ago where I have drawn out the price channel that seems to exist in Bitcoin.
Based on this logarithmic price chart of Bitcoin it seems very obvious to me that we still have quite a ways to go before dropping to the bottom of the channel to find final support. Combined with my past experience of a Bitcoin bear market (winter!) I have no problem seeing the price fall as low as $3000 even before the bottom support of the channel is reached. Of course, the price doesn't drop down instantly by that much - it's a process that will probably happen in the course of many months, just like last time. Whenever I am asked for any predictions, I keep saying 'Maybe spring 2019' as the potential date for the end of the Bitcoin bear market. But, I digress: This article is not about Bitcoin.
Bullish on Ethereum?
Even in my earlier posts I referenced the difference between the price graphs of Bitcoin and Ethereum. Whereas Bitcoin looks to be well on it's way (about halfway through I'd say) in the bear market looking for a bottom it seems to me like the Ethereum charts paint a very different picture.Let's look at Ethereum's channel with weekly candles:
While Bitcoin's log chart clearly shows us quite some ways above the bottom support of the channel the Ethereum chart does not. This is in large part due to the lack of historical data for Ethereum as opposed to Bitcoin, which has an almost 10 year track record. Ethereum only started trading on markets sometime in the second half of 2016, after all, so we have far fewer data points to compare to.
The channel I drew above presupposes that Ethereum has already bottomed out, of course, which is a large assumption. If it drops any lower than the current price, then obviously the channel will end up being wider. I don't think it's far fetched that Ethereum may drop some more either, considering it hasn't hit important support levels yet. Yet, I rarely make my trading decisions based on the fear of short-term losses. I've grown used to the idea that whenever I invest I immediately thereafter incur a 20-30% loss in value due to market volatility. And in the grand scheme of things, these are minor matters too. In the case of a $20K Bitcoin, who cares if you bought Bitcoin at $400 when you could've gotten it for $200, if you had timed it right? The same logic obviously applies to other crypto's, like Ethereum, as well.
What's also interesting about the ETH chart is that contrary to BTC's volumes which seem to be drying up, ETH trading volume does not show a descending pattern like BTC does. This is even more clear on a chart with monthly candles like the one below:
Sure, the monthly candle ended up being red but that's a lot of trading volume.
Ethereum to lead the bull-run?
While Bitcoin is king and has taken most of the spotlight in 2017 I am not sure it is fair to say that Bitcoin led the last bull-run. Let's not forget that the Bitcoin train was rolling since mid-2015 for sure, but other projects went parabolic much earlier than Bitcoin did when it did late 2017. If my memory serves me right it was Ethereum which created waves first with it's ICO's, which brought in billions worth of fresh money into the markets and started the altcoin spring - profits which eventually cycled into Bitcoin to fuel it's run.Bitcoin as a payment method is nice but taken on it's own it can make it seem like it does not have much of a purpose. The arrival of Ethereum into the space changed that completely because through Ethereum it had suddenly become possible to create digital and decentralized assets, as well as other things of value. And the only way to obtain these assets is to enter the economy yourself as a participant - and thus had Bitcoin found (one of) it's purpose(s). So, why Bitcoin? Because you can't buy part of a DEX (for example) with dollars or gold, that's why.
Bitcoin being the de-facto digital currency of choice was the obvious winner at first because it benefitted a lot from the speculative action in the digital asset & altcoin space as most money entering those had to do so by entering Bitcoin first. Now that the bubble has died off and speculative investment is at a low point those benefits seem to be over. What remains is for Ethereum to start fulfilling it's promises - projects delivering succesful implementations - something that could very well spur the next investment bull-run, in my opinion.
The stars appear to be lining up but in the grand scheme, things simply take time. Especially when the scheme is particularly grand, like in crypto. Development is well on it's way though. The Ethereum Enterprise Alliance already consists of more than 500 members of the most impressive companies worldwide (seriously, have a look, it's insane: click here for the members list of the EEA) and while some other competing projects have done well in marketing it is still Ethereum on which most serious research & development is going on and which pushes the technology forward as other projects more or less copy their concepts, albeit with some tweaks. Constantinople is about to start being deployed, and Caspar and a fully functioning PoS is going to be a game changer in the token valuation (and probably significantly increase the token's attractiveness due to it's newfound dividend-feature). Token-sale stats taken aside, I'm also fairly sure that the Ethereum ecosystem itself is probably the best-funded and supported by institutions as well. Sooner or later it is going to pay off. Too much money and too many bright minds are working too hard for it to fail.
It is going to take until 2019 before the first real, serious projects are starting to deliver according to their roadmaps. I am thinking in particular about promising projects such as OmiseGO or the Basic Attention Token, whose success or failure could be the world's first serious blockchain proof-of-concept. The first to create actual value to people, as opposed to theoretical or speculative value, will be the first to prove to the world the value of digital assets as a whole, and may light a fire that potentially sets off the biggest FOMO the world has ever seen.
And let's not forget: Ethereum assets is what you buy, but it will still likely Bitcoin that you buy it with.
If Ethereum has a run, I'm sure that Bitcoin will follow just like last time.
Also, ❤️ Vitalik: