Ethereum: Dubious Speculation

Summary

In this video, we analyze Ethereum’s current market behavior, comparing it to previous patterns seen in both Ethereum and Tesla. Ethereum is showing signs of struggling against Bitcoin in the short term, with a potential drop to around $2,100. However, there's also a chance for a macro higher low before the market enters 2026. The video discusses the importance of monitoring Bitcoin’s movements, as Ethereum may follow a similar pattern to past cycles. While the short-term outlook suggests volatility, there’s hope for a strong counter-trend rally or even a new all-time high depending on market conditions.

Takeaways

• 😀 Ethereum is following a pattern of capitulation into a low, followed by a bounce and a subsequent pullback, which has been seen multiple times in the past.
• 😀 The speaker compares Ethereum's current movement to Tesla's stock, noting similar macro price movements, including a sharp drop followed by a rebound.
• 😀 Ethereum's recent price action suggests it might be near a macro higher low, but the speaker is uncertain about whether it will continue to rise or fall further.
• 😀 Ethereum's performance is being closely watched in relation to Bitcoin, with a short-term struggle expected for Ethereum against Bitcoin over the next week or so.
• 😀 The speaker highlights the similarity between Ethereum's price action in 2019 and the current situation, suggesting a possible similar macro pattern, where Ethereum could see a drop before recovering.
• 😀 Ethereum's price could see a deeper drop, similar to Tesla's pattern, if Bitcoin sweeps its April low, with Ethereum possibly dropping by 20-30% in the short term.
• 😀 Despite concerns over Bitcoin topping, there is a possibility of Ethereum reaching a new all-time high if ETH/BTC valuation improves in the near future.
• 😀 Ethereum is struggling to stay above the logarithmic regression band, which indicates a potential for further downside risk if Bitcoin continues to decline.
• 😀 Social interest in crypto markets remains low, similar to 2019, indicating a bear market environment where Bitcoin may face a drop before a potential rally.
• 😀 The speaker forecasts that by the end of 2026, Ethereum's fair value could align with higher price levels, but only after potentially a long period of consolidation and volatility in the market.

Q & A

What pattern is Ethereum following according to the video?

Ethereum is following a pattern of capitulation into a low, followed by a multi-week bounce, then a subsequent drop. This pattern has been observed multiple times in the past, with the price dropping to a low, then bouncing back, only to face another downturn before recovering.

How does the speaker compare Ethereum's price movement to Tesla?

The speaker compares Ethereum's price movement to Tesla's by highlighting the similar behavior of a sharp drop followed by a recovery. Specifically, the speaker notes that Tesla experienced a significant dip to around $214 before rising to new all-time highs, and Ethereum may follow a similar pattern, with a possible dip to around $2,100.

What is the short-term outlook for Ethereum?

In the short term, the speaker predicts that Ethereum may struggle against Bitcoin. It might experience a macro higher low within the next couple of weeks. There’s an expectation of short-term weakness, with Ethereum possibly falling against Bitcoin before recovering.

What key levels should investors watch for Ethereum in the near future?

Investors should watch Ethereum's ability to stay above the logarithmic aggression band and the price levels around $2,100. If Ethereum falls below this, it could indicate a deeper drop before a potential recovery.

What happened in 2019 that is similar to Ethereum's current situation?

In 2019, Ethereum printed a low around the time when the balance sheet of central banks started to expand. The speaker suggests that Ethereum's current weakness might reflect a similar situation, with a potential drop followed by a recovery.

How does the speaker view the relationship between Ethereum and Bitcoin in the upcoming months?

The speaker expects that Ethereum may underperform Bitcoin in the short term. However, they predict that Ethereum could find a macro higher low in the coming weeks, which would allow for a possible recovery relative to Bitcoin.

What role does monetary policy play in Ethereum's performance?

Monetary policy, particularly quantitative tightening, plays a significant role in Ethereum's current performance. The speaker highlights that the balance sheet of central banks impacts the price action of assets like Ethereum. If the balance sheet begins to expand again, Ethereum could see a recovery.

Could Ethereum reach new all-time highs, and under what conditions?

Yes, Ethereum could reach new all-time highs, particularly if it forms a macro higher low against Bitcoin by late December or early January. This would require Ethereum to outperform Bitcoin in the upcoming months, especially if Bitcoin remains strong or experiences a new all-time high.

What potential risks are there for Ethereum if it reaches new all-time highs?

If Ethereum reaches a new all-time high, it could trigger a significant sell-off. This would resemble the 'butterfly harmonic' pattern, where after hitting a new high, the price experiences a sharp decline, potentially bringing Ethereum back below previous lows.

What does the speaker think about the top for Bitcoin in this cycle?

The speaker believes the top for Bitcoin has already passed in this cycle, based on the ROI from the previous cycle and the time length of the current one. However, they acknowledge the possibility that Bitcoin could sweep its low and reach a new all-time high, similar to the behavior of other assets like Nvidia and Google.