Ethereum On The Brink

Breakout or bull trap? That is the question for ethereum. Ethereum ETH looks on the brink of a “moon.”

Hope is a wasting resource. For most, hope drains away as time passes and heartfelt wishes do not come to pass. Crypto denizens are furiously hoping for an exchange-traded fund.

This is the situation that is driving crypto’s rally. Will the SEC greenlight crypto ETFs and will it be soon?

You would have thought as so many ETF providers submitted proposals at the same time, that someone must have flashed the amber light. Was it the SEC or was it a moment of FOMO where all the institutions played follow the leader as the likes of BlackRock staked their claim to an initial listed bitcoin ETF? Whatever the dynamic, up went bitcoin and the chart is super bullish. Here is my favorite analysis:

What about ethereum, the cool younger brother of bruiser bitcoin?

It’s on the brink of a moon shot too. But wait. BlackRock announced an ETF and up it went like the good old days.

Here’s the chart but also an annotation that begs a question:

The question is, what now? It’s on the brink of a breakout but looks like the classic bull trap where bulls pile on the hope of a rally only for the price to crater.

In summary, No ETF? No luck!

All the while the bitcoin halvening approaches, halving the new issuance of bitcoin, which will kick off at the time of a huge intersection of bullish moments based on the timings of quantitative tightening by the Federal Reserve. That seems extremely bullish but there is a problem, it’s called the “efficient market hypothesis.” It says, the market already knows this stuff so it will be priced into perfection, priced in right now and going forwards.

However, the good news is, or perhaps the bad news is, crypto is not an efficient market. Riddled with wild west players, unknown unknowns, a capricious regulatory environment and a zombie army of malicious actors, crypto markets are not efficient.

So while the traders hunt for the crypto that BlackRock will want to ETF next, the big picture remains what happens to bitcoin because ethereum and the others will follow that lead, and because bitcoin is not an efficient market, it has no ETF after all, then there is big upside waiting to occur.

The bull case is simple: ETF + halvening = moon.

The bear case: No ETF = Crash.

An ETF is priced in anyway. Regulations will squeeze the moon out of crypto.

What do I think?

The whole crypto market is a classic echo of what happens in booms. It might be very similar to the 1970s commodities cycle. There commodities mooned and turfed in ever decreasing cycles for a decade. Nothing matched the 1973-1974 action quite as much after the initial explosion. All the traders held on hoping for a return of the glory days that never came. If this is the case the sort of action we are seeing will not lead to $100,000-plus bitcoin, just a “normal” market sequence of rallies and pullbacks.

Then again, bitcoin is not going away and ethereum is attached at the hip to bitcoin. They are both huge investment and trading brands in a world where branding is everything.

So it seems on balance building a hodl remains the way to go until the moment ethereum breaks out. Bitcoin BTC has done so and ethereum will be a confirmation. Then will be a moment to get a bit more spicy.