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BTC $4102.80

Ether Price Analysis: The Bubble Will Pop — But Not Just Yet

Over the past 30 days, ether has risen a staggering 350% and, at this point in time, it could literally go to a million. There is no top, anyone telling you otherwise is a fool. The reversal will be swift, violent and highly publicized, but until then, I see no reason why the bubble cannot continue for the next few weeks at least.

Screenshot 2017-06-12 at 8.59.26 PM.png

I have no doubt in my mind that Ethereum’s market cap will surpass Bitcoin for a period of time, at least until SegWit and Lightning Network are active. Much like Bitcoin, Ethereum will have to endure its own scaling growing pains, but may find quicker avenues of compromise thanks to Ethereum’s centralized nature. Unlike Bitcoin, however, Ethereum does not currently have a finite supply and therefore should not be seen as a store of value.

Over the past 24 hours, South Korea has led the reported trading volume, even surpassing Poloniex, the ETH/BTC volume leader.

eth worldwide vol.png

We have new ICOs and tokens being released every week. Everyone from Vinny Lingham to Trace Mayer are releasing ICOs. The current most popular use case for Ethereum is buying these speculative vehicles and turning them around for a quick profit. Correlation is not causation, but the proximity of the two should be damning enough. The top 1000 token wallets sit above $5 billion at the moment.

Many people are comparing this to the Dot Com bubble, but I see it slightly differently. I’d compare it more to the early blockchain days when thousands of new alt coins were released. Most were useless, vaporware-riddled speculative vehicles which died quickly or slowly, though some still remain with valid use cases today. The early ICO/token days appear to be very similar, except for the speed at which the ICO 2.0 on the Ethereum blockchain is receiving funds. The BAT ICO raised $36 million in 30 seconds. Bancor, a platform and protocol that will enable tokenization faster, raised $150 million just yesterday in the largest ICO ever and is also the largest crowdfund ever.

One impetus for the end of the bubble would be regulatory guidelines prohibiting the average user from participating in ICO-like vehicles and reducing the participants to accredited investors only.

The market can stay irrational longer than you can stay solvent.
John Maynard Keynes

When the bubble does burst, I would look towards the 200 EMA for support, currently sitting around $85. Price has not touched the 200 EMA since breaking above it in early February. Should RSI hold around 50 after the larger correction, expect continuation of trend. Should RSI dip below 30, there would be a larger chance that trend may be over.

The $100 sell off yesterday, with a bounce on the 30 minute 200 EMA and Monthly Pivot has already quickly retraced.

Fib extensions and monthly pivot yield an immediate resistance at $450. The 1.618 fib extension sits around $490.

Summary
  1. Yes, Ethereum is in a bubble. No, it is not sustainable indefinitely. Yes, it will likely continue in the near term due to the unregulated über speculation of tokenization.

  2. When the regulations hit, likely from the Securities and Exchange Commission which had been looking into the DAO fiasco, the reversal of token value, and subsequently Ethereum, will be swift.

  3. Technicals are showing reasonable upside targets of $450 and $490.

Josh Olszewicz

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