Ether Markets Are Mimicking [BTC]’s 2015 Price Bottom

Past performance is no guarantee of future results, but when history repeats it can be difficult to ignore the potential implications.

Such is the case with price chart of ether, the ethereum network’s native cryptocurrency.

Since Sept. 2018, the price chart of the world’s second largest cryptocurrency has mimicked the market structure of bitcoin [BTC]’s bear market bottom in 2015.

In the world of technical analysis and trading, similar and repeating market structures are known as fractals, similar to the recurring patterns found in art, nature and mathematics.

The two emotions of fear and greed are what drives price action in a market, so repeated investor behavior yielding similar results may not be that far-fetched, especially when those emotions create fractals in the cryptocurrency market.

BTC/USD vs. ETH/BTC comparison

$Eth/btc fractal$

The similarities

The above chart depicts the eerie fractal from BTC’s bottom in 2015 (upper frame) playing out on the ETH/BTC chart (lower frame).

Needless the say, the structure of the two charts are nearly identical, with only minor discrepancies.

As can be seen, going from left to right, both assets printed a “V” shaped bottom followed by a minor rally and subsequent bearish trendline breakdown. After the trendline break, both markets endured a period of abnormally low volatility compared to their typically erratic nature.

As the old saying in investing goes: “never short a dull market”. These periods are commonly found to be when markets store – or accumulate – energy before a significant advance.

Larger players also tend to lose interest in boring markets, leaving just the smaller retail traders who, in large part, favor long over short positions, in turn creating a market that favors the bulls.

Following the dull market, both BTC and ETH produced a minor rally followed by another sell-off, as depicted by the blue downward curved lines.

Both markets quickly rebounded in a curved bottom fashion, driving the price to a “V” shaped top, lastly followed by bullish continuation from the previous rebound.

The differences

Indeed, the similarities are striking, but there are differences between the two that may play spoilsport to the fractal actually playing out.

According to stock market legend Richard D. Wyckoff, price charts abide by a law of “cause and effect.”

In other words, the longer the trend stays sideways A.K.A. “the cause,” the more powerful and long lasting the subsequent trend, A.K.A. “the effect” – another reason shorting a dull market can be risky.

This is particularly relevant here since the cause for BTC’s 2015 bottom was nearly an entire year long, whereas ETH’s cause is so far just over three months.

Taking that into account, it could be argued that a long-term uptrend would be an unlikely result if ETH/BTC keeps advancing since its cause is considerably smaller than BTC’s was.

A bullish effect is still possible, though – just perhaps one that is more proportional to its 3-month cause.

Disclosure: The author holds BTC, AST, REQ, OMG, FUEL, 1st and AMP at the time of writing.

merging railway image via Shutterstock

Published at Tue, 08 Jan 2019 02:00:19 +0000

July 30, 2017

EU Proposes Account Freezes to Prevent Bank Runs; Bitcoin to the Rescue?

Europian Union countries are exploring the idea of imposing an EU-wide account freeze measure to prevent potential bank runs. Could bitcoin provide a viable alternative to secure depositors’ funds?

Preventing the Chaos

European Union states have proposed a new measure which would effectively allow them to freeze bank accounts before a bank run takes place. The measure was planned earlier this year in order to prevent bank runs similar to that of Banco Popular last month. The proposal wants to prevent depositors from pushing over the edge banks that are already failing or will likely fail.

According to EU rules, each depositor that has less than 100,000 euros deposited in a bank account is insured from a bank run. But under the new plan, a potential bank run could force the supervisors to freeze bank accounts of all depositors, and thus freeze withdraws from bank accounts.

Charlie Bannister, of the Association for Financial Markets in Europe (AFME), noted following:

We strongly believe that this would incentivize depositors to run from a bank at an early stage,

Countries that already have a moratorium on bank payouts, like Germany, have strongly supported this new plan. According to a person familiar with German government’s thinking:

The desire is to prevent a bank run, so that when a bank is in a critical situation it is not pushed over the edge,

The bitcoin Effect

Back in 2013, Cyprus’ banking crisis was a hair’s breadth away from a total economic collapse. Cypriot banks were desperate for a bailout from the EU and IMF and many account holders feared that their deposits would vanish. This fear caused a classic bank run and people were rushing to banks and ATMs in order to withdraw as much money as they could.

Inevitably, cash became scarce and the ATMs stopped working. Many saw bitcoin as the last option to secure their funds. The crazy demand from Cyprus for bitcoin caused the digital currency’s value to rise from $47 to $88 – an increase of over 88 percent! With the EU’s new proposal, many believe that bitcoin can once again be a safe way for depositors to secure their funds from a bank run.

What are your thoughts on this new proposal? Do you think that it will prevent bank runs? Will bitcoin be able to save depositors again from a bank run? Let us know in the comments below!

Image courtesy of Pexels

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