Is Ethereum Dead? Why the Run Down?

September 09, 2018

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A lot of people are asking the question, is Ethereum dead? In my opinion the answer is no. I would like to address this from a technical and fundamental perspective. But first, I want to go into the strategy that I am using. If you follow me, you know my primary crypto investing/trading strategy is using ladders in a martingale fashion to take a position.

Right now my average price of entry is just above $300. Obviously, this does not work if I had been laddering in from 800. My average price would be in the 600 range more than likely. However, with an average price of 300, we still have a lot of options and we can go up just as fast as we go down. If you are in my shoes, it’s rather painful. If you are trading forex, stop-losses are necessary to use ladders; however, in crypto I can go into hodl mode while we wait for a move up. Of course this is risky if you believe Ethereum could go to 0 but I do not think that is the case. It also means you could be holding on to your Ether for an extended period of time.

First, why the run down? Is the answer just “because crypto”? Maybe the consensus seems to be, at this point, that ETH can’t scale. ETH was only good for ICOs, etc. If anyone has any other reasons, do share. It’s my feeling that I would rather be invested in Ethereum, a crypto that has purpose.

While Bitcoin is cool, Ethereum can do all the things BTC can, and do them better. BTC has just been around longer so people have confidence in it. Think of it this way, what is backing the dollar? (Yes, libertarians, I know the answer can be argued that it’s nothing.) The dollar has value because a country is backing it, businesses use it, etc. It’s not just a medium of exchange. I believe this is a huge difference between BTC and Ethereum. ETH can run ICOs, apps, etc. What does BTC do? Just act as an exchange? There are plenty of long technical papers on the issue and differences between the two, but in short, that’s my 2 cents.

Fundamentally, it makes little sense for ETH to be going down based on the ETH scalability issue or ICO issue.

1. Ethereum 2.0 is going to fix that and make ETH way better. Crypto, stocks, etc. are all based on what the future holds and apparently it’s not acting that way about ETH. The only reason I can think of is “because crypto”.

2. Ethereum futures. Ok, this is why I think it’s stupid that so many people are short ETH right now. (See below: ridiculous chart). Last year BTC went from 4.8k to 3k, and futures were announced around the same time. The CBOE is waiting on approval from the CFTC to launch ETH futures. What if ETH does the same move BTC did? That would put us around the ATHs for ETH, around $1,400. My $300 ETH position is going to seem awfully cheap if that happens.

The technicals.

You can see we are hitting mid 2017 levels before we had the massive bull run. I was surprised it went down this far with no rebound. While I don’t think it will go past $150, this is crypto.

For a large run-up, we have to break this trend line.

Weekly Chart: We are hitting oversold territory on RSI.

Daily: MACD did cross, but otherwise we haven’t been doing much.

RSI: Check out that massive divergence and oversold state. Ridiculous.

Check out this ETH/BTC chart. Super oversold and we are almost at not just 2017 levels but 2016 levels. That should tell it’s time for a rebound. Yeah, I have been saying it’s due to come back. I have been early on my calls, but I laddered in my positions in preparation.

I am hodling. These are my reasons why. I do not believe Ethereum is dead. It’s the second largest and second most used crypto out there.

Happy hodling,

Sherem

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