Fundamental Backdrop
ETH has a lot of potential in the short-run to outperform relative to BTC due to the ETH 2.0 Contract date quickly approaching and the fact that ETH too is a store of value - considering its inflation rate will be lower than BTC by July 2021, according to this article written on Seeking Alpha on 11/19/2020:
Seeking Alpha - The Case For Ethereum
Decreasing Supply
In the article they describe two factors decreasing ETH's supply over time:
First of all, decentralized finance apps are built using the Ethereum blockchain, more Ether is locked up for use in smart contracts. Similarly, as existing apps become more popular, the supply of Ether available for traders declines.
The second factor reducing supply is the impact of Ethereum 2.0 staking This refers to people holding a certain amount of Ether locked up as collateral to participate in the Ethereum 2.0 network. This Ether that is staked cannot be accessed until the completion of Phase 2 of the implementation, likely several years from now. Effectively, this staking process will reduce the amount of Ether that is available for speculators and investors to purchase. A lot of people that stake their Ether will likely already be long term holders anyways, but even a small amount of reduced liquidity is significant given Ether has such a small market cap. This aspect of the Ether 2.0 Rollout is bullish for ETH, according Eric Conner at Gnonnis, who was quoted in a recent Coindesk research paper.
Rising Demand
This shrinking liquid supply will be met by rising demand:
*The Ethereum 2.0 implementation is likely to increase the network value of Ethereum. By improving scaling solutions for Ethereum, it will attract larger institutions to create applications that rely on it. The Ethereum 2.0 implementation will allow people who stake their Ether to earn returns from holding coins, just like holding a bank deposit.
*This mechanism turns Ether into a positive carry asset and should support Ether’s function as a store of value.
*Closely related, the growing institutional acceptance of digital assets that is so central to the near term bitcoin thesis is also positive for ETH. Just as larger institutional investors have invested in bitcoin as a a hedge against fiat currency debasement, they will also turn to Ether as a complement to cash and securities.
*Ether’s current market cap of ~$53 billion is less than ⅙ that of Bitcoin, but as it becomes larger, it will attract larger institutions, creating a self reinforcing feedback loop. As it becomes easier to purchase cryptocurrencies, more retail investors will also enter the market. Notably. Paypal, recently added Ether access capabilities alongside BTC.
Technical Analysis Conclusion
ETH is setting up for a breakout to $541 using the orange trend line. Could happen today/tomorrow, if longer then be wary of a pullback. Have proper Stop losses in place.
Risk Management
Remember - NEVER trade more than 1-3% of your capital per trade. This advice comes from the best money managers in the world.
ETH has a lot of potential in the short-run to outperform relative to BTC due to the ETH 2.0 Contract date quickly approaching and the fact that ETH too is a store of value - considering its inflation rate will be lower than BTC by July 2021, according to this article written on Seeking Alpha on 11/19/2020:
Seeking Alpha - The Case For Ethereum
Decreasing Supply
In the article they describe two factors decreasing ETH's supply over time:
First of all, decentralized finance apps are built using the Ethereum blockchain, more Ether is locked up for use in smart contracts. Similarly, as existing apps become more popular, the supply of Ether available for traders declines.
The second factor reducing supply is the impact of Ethereum 2.0 staking This refers to people holding a certain amount of Ether locked up as collateral to participate in the Ethereum 2.0 network. This Ether that is staked cannot be accessed until the completion of Phase 2 of the implementation, likely several years from now. Effectively, this staking process will reduce the amount of Ether that is available for speculators and investors to purchase. A lot of people that stake their Ether will likely already be long term holders anyways, but even a small amount of reduced liquidity is significant given Ether has such a small market cap. This aspect of the Ether 2.0 Rollout is bullish for ETH, according Eric Conner at Gnonnis, who was quoted in a recent Coindesk research paper.
Rising Demand
This shrinking liquid supply will be met by rising demand:
*The Ethereum 2.0 implementation is likely to increase the network value of Ethereum. By improving scaling solutions for Ethereum, it will attract larger institutions to create applications that rely on it. The Ethereum 2.0 implementation will allow people who stake their Ether to earn returns from holding coins, just like holding a bank deposit.
*This mechanism turns Ether into a positive carry asset and should support Ether’s function as a store of value.
*Closely related, the growing institutional acceptance of digital assets that is so central to the near term bitcoin thesis is also positive for ETH. Just as larger institutional investors have invested in bitcoin as a a hedge against fiat currency debasement, they will also turn to Ether as a complement to cash and securities.
*Ether’s current market cap of ~$53 billion is less than ⅙ that of Bitcoin, but as it becomes larger, it will attract larger institutions, creating a self reinforcing feedback loop. As it becomes easier to purchase cryptocurrencies, more retail investors will also enter the market. Notably. Paypal, recently added Ether access capabilities alongside BTC.
Technical Analysis Conclusion
ETH is setting up for a breakout to $541 using the orange trend line. Could happen today/tomorrow, if longer then be wary of a pullback. Have proper Stop losses in place.
Risk Management
Remember - NEVER trade more than 1-3% of your capital per trade. This advice comes from the best money managers in the world.
Note
Notice this is the highest volume green bar since Nov 4th when the price rose nearly $100 in the 3 days since that high volume confirmation green candle.If we go by the large volume spike bar and we have a similar move - that would put ETH at nearly $590 by Nov. 23rd
Note
ETH 2.0 deposit contract now >100% participation.Price will swell now that 2.0 is assured
GLTA
Position accordingly
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.