Ethereum: Dubious Speculation

Benjamin Cowen

Introduction to Ethereum Discussion

The discussion revolves around Ethereum (ETH) and its relationship with Bitcoin (BTC), particularly the ETH/BTC pair, as well as ETH/USD. The speaker reflects on past predictions and analyses regarding ETH's performance, especially in relation to Bitcoin dominance and monetary policy.

Past Predictions and Analysis

  • In 2019, the speaker published a video titled "Eith Bitcoin is severely undervalued," analyzing past trends, correlations, and fractals, suggesting ETH/BTC was undervalued.
  • Later predictions in 2022 indicated ETH/BTC could drop to 0.03 to 0.04, which was met with skepticism at the time.
  • The speaker notes that ETH/BTC has indeed reached the 0.03 level, albeit much later than initially anticipated, suggesting a long distribution phase similar to patterns observed in the stock market.

Impact of Monetary Policy

  • The discussion emphasizes the significant role of monetary policy in the performance of cryptocurrencies, particularly the distinction between quantitative easing (QE) and quantitative tightening (QT).
  • The speaker suggests that the end of QT could be a catalyst for ETH/BTC to bottom out and potentially reverse its trend, referencing past cycles where ETH/BTC bottomed out around the time QT ended.

Technical Analysis

  • Technical analysis, including Fibonacci retracements, is used to justify the 0.03 target for ETH/BTC, suggesting that this level could represent a significant bottom.
  • The speaker also references the supply of ETH and its implications on price, noting that the supply has started to increase after a period of decrease following the merge.

ETH/USD Analysis

  • For ETH/USD, the speaker discusses the resistance at $4,000 and how ETHUSD has been unable to break through this level, often resulting in market-wide downturns when it approaches this price.
  • Two potential scenarios are outlined: an optimistic view where ETHUSD holds the bull market support band and rallies without further downside, and a pessimistic view where it fails to hold support and sees one final drop before potentially reaching new all-time highs.

Influence of External Factors

  • External factors, such as decisions by the Federal Reserve (e.g., ending QT or starting QE), political pressures, and labor market data, are considered potential catalysts for changes in ETH's performance.
  • The Bank of Japan's interest rate decisions and their historic correlation with ETH's performance are also discussed, suggesting a pattern where ETH experiences significant drops following certain rate hikes.

Conclusion

  • The speaker concludes by encouraging an optimistic outlook, citing the adage "bears sound smart, bulls make money," while also warning of the unpredictability of the market and the potential for further downturns before potential uptrends.
  • The importance of monitoring the bull market support band for ETHUSD and the impact of Bitcoin's performance on ETH's potential movements is stressed.