A slightly different article for you to read while I’m lounging around on vacation! I hope you will like this format, so don’t hesitate to contact us if you want more like it.
Warning This article does not constitute investment advice or an invitation to invest. It is for information purposes only. You are the only one responsible for your trading and investment decisions.
Don’t forget, too, that when it comes to trading, it’s essential to at least secure your winnings in a cold wallet. For an easy-to-use cold wallet, we refer you to D’Cent, which we have already presented. We would like to thank them for sponsoring this column.
Ethereum, launched in 2015 by Vitalik Buterin is much more than just a cryptocurrency. It’s a blockchain that has paved the way for a new era of (more or less…) decentralized computing. At the heart of Ethereum lies the ability to create and execute smart contracts, autonomous programs that act in accordance with pre-established rules once certain conditions have been met. These contracts eliminate intermediaries, automate processes, and bring greater confidence to online transactions and relationships.
Ether (ETH) is Ethereum’s native asset, serving as the fuel for executing smart contracts and paying transaction fees. However, Ethereum is more than just a digital currency. Its ecosystem has spawned a proliferation of projects, some of them innovative, ranging from decentralized finance protocols (DeFi) that are reinventing traditional financial services, to non-fungible tokens (NFTs) that represent the unique digital property.
Analysis of tokenomics
Unlimited supply… This is a word that must be banned when creating money, why? Because when a quantity of a good tends towards infinity, it means that its value tends towards ZERO. Imagine if we figured out how to produce gold cheaply in an unlimited way, its price would plummet and all Granny’s reserves would lapse! It’s the same with any asset, including crypto-currencies!
Fortunately, everything has changed since the famous “THE MERGE” and the EIP-1559 update.
Why? First of all, because ETH has moved from a “proof of work” system to a “proof of stake” system, encouraging market players to block their assets to participate in the network. The aim? To reduce the supply available for purchase/sale, but also to increase the decentralization of a network that was previously only slightly decentralized. AND above all, the update that allows ETHs to be burned: whereas before, the entire amount went to validators, now a substantial portion is burned, constantly reducing the quantity of ETHs available!
This data highlights the reduction in supply over the last few months. This is likely to become more pronounced in the future, as network costs rise and the next bull cycle begins.
Where to buy Ethereum?
First of all, at what price should you invest?
In terms of long-term investing, you generally need to buy below the 0.618 retracement (blue zone), which tells us that buying below $1,904 is a professional buy on Ethereum. However, that’s not enough: we need to find the zone where professionals will decide to buy.
Here, two zones clearly stand out:
- The first, the bottom one, is around $1,000, a psychological round figure that has had an effect.
- The second is the one that’s currently gaining support (I’m writing these lines on August 15, 2023) around $1600.
Two zones that will certainly be bought back in the event of a sharp drop in the coming weeks. Remember, the bearmarket ends when the new entrants arrive. You will be when it’s over!
In any case, for pure investors, DCA enthusiasts, you know what I mean: it’s professional to buy under $1,904!
What price for the future bullrun?
The question remains, will we still have a bullish phase with bitcoin’s new halving? Why wouldn’t we? As long as the market doesn’t undergo a major change such as mass adoption, a bubble bursting or the like, there’s no reason why we shouldn’t see a further rise in the price of Bitcoin and therefore altcoins (which will have survived). Ethereum, as the second most widely used cryptocurrency, is likely to experience this new era.
My logic is as follows, movements are smaller and smaller during bullish phases.
As the previous movement reached a top around the 3.618 Fibonacci projection. I assume that this movement will be less extensive and will wait for the previous level, i.e. the 2.618 Fibonacci.
This target would therefore be around $13,500! That’s x10 from the bottom, (personally, I’m aiming for x7 on Bitcoin, so a x10 wouldn’t be out of line for the chasing currency).
Towards a flippening of ETH?
So, what’s a flippening? It’s the moment when Ethereum will finally overtake Bitcoin, in terms of MarketCap, not price!
As a reminder, MarketCap is calculated by multiplying the price of a token by the quantity of tokens in existence. Bitcoin already has over 90% of its tokens released, when ETH is deflationary (its token quantity decreases over time), which will constantly increase its MarketCap.
What’s more, the quantity of Ethereum tokens burned depends on network costs. Network fees are relatively expensive in bearmarket, so imagine in bullrun… A simple shipping Tx will no longer cost $1, overnight, but surely in the $10-20 range… Which will accentuate the deflationary effect.
For me, it’s quite clear the Flippening will arrive at the next bullrun.
Is it really necessary? Ethereum is a must-have for any large investor, not only for the asset diversification necessary in good portfolio management, but also, because it’s a “biggie” in the cryptocurrency market that should deliver on its promises.
The goal stated in the title of this article is clear, around $13,500. This is my ultimate goal, of course, and we may or may not exceed it. That’s why a reverse DCA will be unavoidable at the next bullrun!
In any case, when you buy cryptocurrencies, especially ETH, remember to keep them safe, using a cold wallet like the one from our partner D’Cent.
I’m going back to my vacation (that’s not true, I wrote this article ahead of time… YOLO!). See you next week for a new market analysis!
Entrepreneur & Dad, passionate about cryptocurrencies, I describe for you the technical analysis. Cofounder of Cryptocademia, a free platform to learn all you want/can about blockchain ! Meet you there at https://www.cryptocademia.com
My job: look at charts and interpret them for you.
Beware, I do not know all the truths.