ETH Breaks Out, and the Case for Buying ETH instead of BTC

2018年4月24日

I'm publishing this on the daily though technically the candle isn't printed yet just to include the daily Murrey's Math Oscillator (4h has printed several candles above this line). I don't think I've yet seen an indicator do a better job at calling crypto bottoms than this one on the daily chart, and it appears to have called the bottom for ETH and both of BTC's bottoms this year. Unlike many other oscillators *cough* RSI *cough*, it's showing us in no danger of getting overheated anytime soon, which ought to ring true after diving 75% in 3 months with the final month being an outright freefall.

ETH is breaking out of its downtrend channel today. Unlike BTC, ETH hit its ATH in January instead of December, and then retraced further (~75% versus ~70%) and far more dramatically. This has made for a much more dramatic pattern. On the weekly, it's more or less V-shaped. On the daily, it's clear that there was some time spent consolidating/accumulating at the bottom. ETHBTC is similarly bullish, and frankly, looks like it finished an ABC correction and is starting a new cycle up.

ETH is the possibly the single coin that can currently claim to have a very lucrative established use case - it is the way nearly every new blockchain project raises money. There are a variety of competitors that are on the horizon (NEO, XLM, LSK, QTUM, EOS, and more) but they have comparatively little adoption yet and nothing close to the fiat gateways available for ETH. Nearly every presale/ICO/airdrop is still an ERC20 token. I think that this means that:

(A) ETH is still going to be the key coin for ICOs for at least a year, and depending on how well it solves its problems and entrenches itself to stave off competition, possibly for far longer than that.
(B) A renewed bull run in BTC is far more bullish for ETH because it means a whole new wave of media frenzy and renewed interest by the general public. It's fertile ground for round 2 of the ICO gold rush. The worst thing that could happen to ETH is a 2014-style BTC bear market, and I'd argue that for the past 2 months ETH has been in so much sharper of a free-fall than BTC because it was staring down the barrel of its key use case drying up.

It follows that if BTC collapses now, ETH is probably going to lose these gains quickly, but BTC is showing a lot of green shoots right now. The whales appear to me to have decided to step in and end the correction this time. It is holding key supports and breaking steadily through a zone of confluent resistances around 9000. BTC found heavy support on the orderbooks at the 6400-6500 bottom and keeps finding heavy support anytime it threatens to correct more than a few percent.


A number of top 20 alts and especially BCH are rallying far harder than either BTC or ETH. Not that going from 365 to 685 is anything to scoff at, but I think if BTC continues running and spends May at 10k+ then ETH really starts accelerating. The meteoric rise and fall of ETH left fewer established levels of consolidation to expect as resistances (I've marked some of the biggest ones I see on the chart) and frankly, if the market decides the cryptocurrency bull market is back, then ETH gets the use case it had 3 months ago back.

I'm an amateur and you definitely shouldn't take anything I say as financial advice. I'm interested in any feedback.