Sentiment is euphoric for this young, immature technology, and the dumb money seems to think ETH can just rise forever. ETH is now worth around half of the market cap of bitcoin. People read that and probably think “oh okay” …that is astonishing. Bitcoin has been around and working reliably for over 8 years with a large attackable bounty that has never been stolen. We know it works. I mean, its almost silly to compare btc and eth as one of these aims to be money, is digital gold, and one of these (as admitted by its developers) does not aim to be. Further, there is no cap on the supply of ETH. Many of my friends have contacted me about ETH because they simply see the hype, and want to buy in, this is called the dumb money. If i said the words “smart contract” they would have absolutely no idea what I was talking about, let alone “the DAO” or “recursive loop function” …these are the types of people who have fueled this truly astonishing rally in recent weeks. If you rode this bull, I commend you, but its time to take your profits in my opinion.
A *huge part of the demand for ETH is based on these ICOs. 90-99% of them are complete garbage and will fail. It makes no sense to give these people all the money up front, there is no incentive to follow through thereafter. But lets assume the incentives were right, and there was a good amount of substance in these companies/ideas *right now. Okay, well then we get the fact that just like the DAO these are all code that if not properly implemented, can be hacked. And as Andreas recently touched upon in one of his videos, these should be tested with 10k and gradually increased after long amounts of time of proving they work. As opposed to the millions, or tens of millions that are being thrown at them in a matter of minutes, or seconds. Its ridiculous. These are now huge bounties for hackers. But okay, lets assume there is no major hacks. The biggest point of all, is that, if it looks like a security, walks like a security, and talks like a security…ITS A SECURITY! And to the SEC especially, they are a hammer, and everything is a nail. I’m honestly astonished they have not taken action yet, it seems destine to me. I just saw yesterday that the PBOC is planning to regulate ICOs, dk much about it but certainly not a good thing. Long story short, there is a truly epic bubble in ICO’s, and when it pops, these ICOs will inevitably be sold for Ether which will create an enormous amount of ether available for sale, that will be sold for bitcoin or fiat. The same way people bought ether to buy ICOs they will sell it right back.
ETH will be eventually switching to the totally unproven mining algo POS. POS is literally an “open technical question” as Balaji S. put it. I have no faith in POS, it is a garbage mining algo and its hard to believe that the wheel has been reinvented. And if it is to succeed, it will take a lot of attacks and time to prove that it can work. I am not up on every detail with ETH, I have heard they may not switch to POS, or they may delay, and IMO it really does not matter, they are damned if they do, damned if they don’t. Why? Well if they do they are damned for the reasons above, if they don’t, it would honestly be quite funny as they would essentially be admitting they are simply a more expensive to use ETC. Which brings me to my next point, there is competition from ETC (on the rise) and the soon to be created RSK. Definitely not a good thing you may be able to do literally all the same stuff on these new technologies, so why exactly is ETH worth so many multiples of them and half of bitcoins marketcap with an unlimited supply? Its like the joke of the century.
Anyway, those are basically my thoughts, I hope I do not offend, it is not my intention. I could be wrong, make up your own mind. Good luck.
Some hidden bull divergence suggests we could get a bit of up now for a nice right shoulder before we go lower:
What now? Tough to say, two most likely scenarios are:
a. price consolidates for a bit and then starts to make its way back up to form a big right shoulder before completing the pattern, breaking the neckline and going much lower.
b. price simply continues on down, breaks major support from the red trendline/.618 fib purple line and the panic selling begins.
The destination is the same IMO. We should probably be able to tell which of these two scenarios is coming by the end of the week based on how this weekly candle turns out.
Lots of bad news this week for ICO's and regulations, and breaking below support, looks like the downtrend continues. Last hope is the red dotted line but if it couldn't get enough umph for the right shoulder now, I wouldn't bet on that holding:
Pretty ridiculous to think the SEC would ever actually approve an ETH ETF before it approved a BTC ETF so kind of silly. Anyway, not much has changed, but have to acknowledge the possibility that the ETH kool-aid pumpers could push this up for a right shoulder up to the blue trendline (and a bigger wave b then expected). I'm still sticking with the chart though until the price breaks back above the purple 50 fib and ultimately yellow trendline I added:
Since the daily rsi bounced at the green trendline the possibility remains for that upswing to later get shut down by the descending light blue trendline, but again I don't think thats likely. Either way the final destination is lower : )