Following up from our last post, we thought it would be good to talk about what the “true believers” are doing while their ETH is falling. We hinted that this has actually accelerated the ICO craze – but we didn’t back that up with much. There is no question that the overall results (i.e. market cap of the entire market) would be that the entire coin market would suffer when its leader (which has been ETH) is getting crushed; but that said, the proof that the “true believers” are getting some hedging benefits is in the following Gainers and Losers seen above.
Some of these figures are distorted due to recent issuance, but look at the volumes – FUN, METAL and several others are showing significant turnover (and are up big despite the overall market malaise) – which, because of the obvious benefits of liquidity, implies a growing acceptance of these coins as future mainstream currencies – and FUN, along with some others, is itself, trading much higher than its issuance price. Now the total market capitalizations of these minor players in no way offset the losses that are being felt in Bitcoin and Ethereum, but the are signs of a developing market, which bode well longer term for the cryptocurrency markets.
All of these events, while still needing more time to resolve, are merely growing pains and that it’s more likely we will see the old highs breached in the next 12 months. Aside from a noticeable pull back in a major ICO (which would be short-term bullish), keep an eye out for support levels of ETH $175 and ETH $150 as key physiological levels; otherwise, technically it’s unclear how much further the market can fall, but ETH $100 would be the biggest key support level – we don’t expect that to happen, but it’s not impossible and we would not be a buyer here until some real positive news emerges. The second best thing would be some mainstream media outlet publishing stories about this fall and suggesting its time to buy – the market needs some good publicity.
It’s worth noting that our overall opinion is that we believe all of these events, while still needing more time to resolve (ETH isn’t done being pressured), are merely growing pains and that yes, ETH is still likely to see its old highs breached in the next 12 months. But this in no way suggests we think that the bottom is in, these are a volatile asset class and as a result that price action is going to continue to be difficult. From a news standpoint, we would like to see a few coin auctions being delayed or the failure of an auction that was widely expected to be strong. We have seen some pull outs of ICOs but we are watching closely the ICO market to see if there are any unexpected failures. If for some reason ICO cancellations over the next few days (before July 17th) don’t happen AND sales remain brisk and strong – then we would start to become bullish on ETH. One thing is for sure when you get this sort of technical damage the first thing you want to see is market stabilization – big sudden rallies should not be trusted, the market will need weeks or months to heal before continuing higher.