CRYPTO WEEKLY OUTLOOK - Tradable Patterns
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Jul 18,
2021
CRYPTO WEEKLY OUTLOOK
ETHEREUM + INDUSTRY FUNDAMENTALS + BITCOIN + RIPPLE
ETHEREUM (ETHUSD)
Join the world's largest
Ethereum (ETHUSD) is in the early stages of trying to halt a roughly 2 week slide (within the broader
asset manager and 2
reversal since the May record high), and is once again on the verge of reclaiming the
of the world's 5 largest
psychologically key 2k whole figure level. Significantly, until ETHUSD reclaims the 50% Fib retrace
(and 5 of the 10
of the March 2020 to May 2021 rally, odds remain high for a retest of the May and June lows in
largest) hedge funds
July. Bulls should not disregard the currently low probability of a break below the May/June lows
by AUM as daily
followed by a capitulation low in July sometime back to around the psychologically key 1k whole
readers of Tradable
figure level. Although the Head & Shoulderslike pattern (on the daily chart) is not well formed (with
Patterns' technical
the right shoulder much larger than the left), it is arguably in its advanced stages. ETHUSD's
analysis. As seen on
correlation to BTCUSD (on a weekly chart) appears to be trying to bounce from zero and the lowest
Bloomberg, Refinitiv, Factset,
level since September 2019. Congratulations to those who heeded the warning May 16th of the
Interactive Brokers, readers
major top forming, and to longer term bulls who remained long ETHUSD or initiated ETHUSD longs
include global top 10 investment
after the March 2020 crash, with bullish developments profiled in the March 29th, 2020 analysis and
banks. If you represent an
increasing upwards momentum cited April 26th, 2020. I went long in June in the 22002600 range,
institutional investor or potential
and am targeting 24002700 tentatively for July sometime. The weekly Stochastics and MACD still
distribution partner, write to
slope down, weighing on the bottomish daily equivalents.
info@tradablepatterns.com to
WEEKLY/DAILY LIQUID
request Bloomberg, Refinitiv and
Factset readership reports.
ETHEREUM FUNDAMENTALS Ethereum (ETH) firmed in its market dominance % in late June and appears poised to resume its gains versus other alts. Source: https://tradingview.com The London hard fork is expected August 4th and is widely anticipated for its incorporation of EIP 1559, an Ethereum Improvement Proposal that will split the gas fee into a base amount and a tip by senders, where gas fees effectively see a reduced volatility (due to the automatic setting of the base portion of the gas fee depending on how full a block is). Further, although there is no limit on the supply of Ether that can be created (unlike with BTC), the supply of Ether will be curbed by the burning of the base portion of the gas fees.
The Ethereum hashrate is beginning to recover as the Chinese miners who relocated to other jurisidictions are coming back online, and resuming production. Ethereum hashrate had seen a dramatic pullback after topping in late June at roughly double the prior high in 2018, due to the escalated crackdown since June on Chinese miners and exchanges by the Chinese government. Source: https://bitinfocharts.com NFT (Non Fungible Tokens) has been white hot in 2021, with most NFTs launched on one of 2 Ethereum token standards (ERC721 & ERC1155). NFTs on digital art, collectibles, and ingame purchases have been auctioning at tremendous values, suggesting a bubble in the NFT space, but drawing more investor attention into Ethereum/Ether and the numerous use cases for NFTs nevertheless. Meanwhile, demand for Ether exposure through Grayscale's ETHE (ETH Trust) is likely to rise again with the ETHE discount on NAV drawing in retail investors expecting the discount to converge to zero (once Grayscale gets approved for converting its closed end trust into an ETF). While ETHE traded at a premium, retail investors were turning to ETFs available in Canada, Switzerland and elsewhere where premiums are arbed away. With the Grayscale closedend fund products, there is a limited secondary market period for retail investors to buy from institutional investors who have the advantage (while ETHE traded at a premium) of being able to subscribe to the Grayscale products at the NAV. Three ETH ETFs (issued by CI, Purpose and Evolve) went live on Canadian markets April 20th, adding to the 3 BTC ETFs already available through the TSX and placing pressure on the SEC to finally approve ETF applications pending on BTC. Source: https://ycharts.com Regardless of any further weakness in ETHUSD in July, the February 8th CME Ether futures launch will continue to attract more institutional participants into ETH as the CME is the market leading exchange for institutional futures trading. With the ability for firms connected to the CME already to
be able to quickly access ETH futures, they'll now increasingly take comfort in going long ETHUSD knowing they can hedge through existing brokerage relationships and/or exchange memberships. Since March 2019, the growth in ETH wallet addresses has tracked fairly closely, BTC wallet address growth. Source: https://bitinfocharts.com Click here to read the rest of Ethereum's fundamental analysis, industry fundamentals, along with technical and fundamental analysis of Bitcoin and Ripple. INDUSTRY FUNDAMENTALS The crypto universe is sitting just shy of USD 1.4T in market cap as of Jul 18th. The Coinbase (COIN) Nasdaq direct listing on April 14th and its 50% plus drop from its opening day peak to its lowest level May 19th marked a major top in the crypto industry retail market euphoria. Retail FOMO was extreme in Q121 with Robinhood announcing 9.5M clients had traded crypto during this period, a more than 5.5x increase from Q4. Market sentiment turned down since around mid May, with Elon Musk tweeting on May 13th Tesla will no longer accept BTC for payment. Musk also cautioned that BTC may not be the best coin to use given the energy usage in mining BTC. The Chinese government further popped the crypto bubble by ramping up the crackdown on crypto mining and crypto exchanges in China. Earlier in April, sentiment had already been dampened by the Turkish government ban on cryptocurrency transactions, along with the Indian government's draft bill on banning cryptocurrencies (where there'll be a 36 month grace period for holders to exit positions). The Biden proposal to nearly double capital gains tax in the US for households earning USD 1M or more added selling pressure. The DeFi market cap is just above USD 73B as of Jul 18th (as per CoinGecko), with DeFi representing just above 5% of the entire crypto market and 30% of Ethereum's market cap.
Source: https://coingecko.com The number of DeFi users (as defined by unique wallet addresses) is just above 3M as of Jul 18th (as compared to the 50M or so total blockchain addresses). A key factor behind the surge in activity on decentralized exchanges like Uniswap is the ability to participate on DeFi project tokens before they list on centralized exchanges. For DeFi to continue to grow, DeFi projects'll need to become more userfriendly for the mainstream masses and collaborate more with the more popular centralized exchange partners in packaging and distribution. Regulators will eventually sweep in as well on this space, as much of what's available to trade in DeFi are arguably securities. Source: https://www.theblockcrypto.com With the crypto market bubble burst, Coinbase's volumes have fallen to that of the leading decentralized exchange Uniswap's. Click here to read all of this week's industry fundamentals, and all technical and fundamental analysis of Ethereum, Bitcoin and Ripple.
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reversal or continuation during the week
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on technical analysis and news flow. For
instance, Monday coverage is on 2 Agris
(and potentially 1 Index), while Tuesdays
are devoted to 2 Indices (and potentially 1
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CRYPTO WEEKLY OUTLOOK
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content like May 16,
2021’s 42 pg report
preview.
Crypto Weekly
Outlook covers
crypto industry
fundamentals and
technicals/
fundamentals
Sundays on Bitcoin,
Ethereum and
Ripple.
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