Those of you that have followed me for a while know that I initially got into ETH back in January of 2017 and have tracked it closely during that period. Over the past 6 months I have focused my analysis on ETH (and other coins) relative to BTC . Whilst my base currency is USD (not BTC ), my view is that if I am long crypto, I want to make sure I am skewed to the over performing coins.
I focus on the long term trends, you can see from these posts that I called the December 2017 breakout of ETH relative to BTC (ETHBTC breakout in a week or two or sooner? ), then the path of ETHUSD and ETHBTC (ETHUSD to enter large leg 3 impulse driven by reversal on ETHBTC) and have also forecast ETHUSD hitting 1400 before a pull back in this post.
I have since spent time drilling down even further into the long term trend of ETH, using Bittrex data that goes back to 2015.
I have plotted ETHUSD and ETHBTC over the past 2.5 years using a log scale. From this you can see:
- there have been two large bull impulses followed by two large bear impulses
- both bull impulses lasted approximately 150 days and produced an uplift of 2000%
- both bear impulses resulted in an 80% correction and both were longer than the bull impulses
- there have been two large bull impulses followed by two large consolidation phases and these, unsurprisingly, share the same characteristics of ETHBTC
- Bull impulses up between 4500-7200% in approx 150 days
- Bear impulses down approx 70%
If history repeats itself
- we have approx 90 days of this bull impulse left and probably are in the middle of the third ETHBTC wave
- the third wave will reach to about 80% higher than the top of the previous wave 2 bear impulse (0.11 increase 80% to 0.20) followed by a quick but aggressive 4th wave pullback to around 0.11 again.
- ETHBTC will finish out with a 5th wave up to 0. .6 BTC and ETHUSD to around $8k-$9k.
I have more comfort in the ETHBTC price achieving its target than the ETHUSD price. However, if history repeats itself we would see ETH becoming the King of Cryptos and so we can compare some of the performance we have seen in BTC to what we might expect to see in ETH. So let's look at where the scenario would place us once it has played out by the middle of May (approx 70 days):
ETHBTC at 0.5
ETHUSD at $8,000
BTCUSD must be at $16,000
ETH previous high mkcap ($1,450) : $140bn
BTC previous high mkcap ($20,000) : $340bn
Therefore in approximately 90 days this would price ETH market cap at:
- x2 BTCs all time high
- x5 ETHs all time high
- x10 ETHs current
Time it took
- BTC to increase x5 from $4k to $20k: 75 days
- ETH to increase x10 to its $400 high: 80 days
History often repeats itself, although often the scale and timelines can be quite different, in the case of ETHBTC we have had two periods remarkably similar and a new one which could be unfolding to be the same. I'm not saying we are necessarily going to repeat these exact figures as even though the scenario testing suggests they are achievable, they do look high. However, if we can even get close to repeating a similar pattern, this in no doubt for me puts ETH as the buy of Q1 2018!
Please like (thumbsup) and follow if you want me to update over the next 90 days.
I have had several people PM to ask whether to buy now or wait for a dip in ETHBTC. I think that question really depends on whether you think we have completed wave 3 in ETHBTC or not. It's something I've been trying to figure out myself. I've posted a link below to my thoughts.
Please note updates throughout the following period will be made here rather on any referenced post. So please post any questions and comments here.
ETH 1265 / 840 = 50%
BTC 12000 / 8543 = 40%
Calculated ETHBTC = 0.105
Not a massive data point, but helps support the hypothesis and an uptick in the chart.
Next support below this is 0.5 fib @ 0.8.
On a relatively short time frame basis, we have just rejected the 0.382 top of the last bull leg (shown as '3?') and not far from the 1D 50EMA (which was never touched in the 2017 bull run). This could well be a reversal area for the consolidation that has occurred and allow us to continue wave 3.
We have the key area. I am now looking for confirmation of a more sustained rejection. This can come from a higher low on a time frame of at least 4hr but preferably 6,12 or 24hrs. Failing that, I'll be looking for a rejection of the local low (0.091), forming a double bottom.
During the last 2017 ball run, wave 4 retracted to 0.5 also. In 2016 it retracted to just above 0.618. This year has some different characteristics. For example, this year we have broken the 1D 50EMA, but we didn't touch it in 2016 and 2017. We would also have expended wave 3 to go higher in the channel if we were matching year for year. This year, wave 3 'only' extended wave 1 by approximately 4.618, which is much closer to the 2016 fib extension of 5.618.
Looking forward to wave 5
2016 wave 5 extended wave 3 by 3.618, so we should probably be looking at an extension of around 2.618 to 3 for the wave 5 when it comes. This would take wave 5 to about 0.27BTC.
I am open minded about a reversal at 0.5 (0.078) or going down through 0.618 (0.068) or slightly further. To manage this risk. I therefore sold a bit of my trading ETH for BTC on the last retrace, slightly above 0.08.
We could go up from here or do a double bottom and reverse at the 0.5 (0.078) support again, so I will watch for this. A failure here and I will sell a bit more because I would assume we are heading for 0.618 (0.068).
We have some way to go before the wave count is invalidated by wave 4 crossing wave 1 at 0.045.
If we break down, I will sell the remainder of my trading pot and move some of my core until a reversal becomes evident.