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Ethereum (ETH) in Free Fall, Down 34% Following Bitcoin Cash Idea

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  • Ethereum (ETH) slides 34 percent as bears step up
  • Bitcoin Cash may be used to temporarily solve Ethereum’s scalability problems

Vitalik has an audacious plan of integrating Ethereum with Bitcoin Cash before ETH 2.0 full activation. However, there is resistance from some quarters with a majority against his idea. In the meantime, bears are in full throttle as ETH slumps 34 percent from last week’s close.

Ethereum Price Analysis

Fundamentals

Regardless of how Ethereum supporters try to scrutinize the platform’s performance, everything will boil down to scalability. Striking a perfect balance and ticking all the boxes satisfying the requirements of the blockchain trilemma is hard.

Therefore, while the developer community agitates for scalable networks, it all about making good choices. Presently, Vitalik and team chose decentralization and security over scalability. Limiting as it is, that is not stopping project managers from flocking and launching dApp from the platform. And Joseph Lubin, in an interview, said the network, despite challenges, has to some extent scaled:

“So, I think we’re at many tens of thousands of decentralized transactions per second on the Ethereum network right now. And another point that I believe is that we’ve got all this scalability for specific use cases.”

Therefore, the idea that Vitalik is putting forth is off-putting for Ethereum developers. While it could work considering Bitcoin Cash recent hard forks and their working towards inherently scaling the network

without layer two options like in Bitcoin, his choice didn’t bode well with developers. Francis Pouliot saidVitalik’s proposal is an admission of failure:

“The shitcoin has hit a three-year low versus Bitcoin. The founder has all but declared the project a failure today by proposing a humiliating BCash integration to delay the (yet unsolved) scalability crisis.”

Candlestick Arrangements

Ethereum ETH

Presently, the cryptocurrency scene is all red. Leading the plunge are periphery altcoins. Compared, ETH performance, considering its liquidity, is worse. Printing double-digit losses in the last week, bears are firmly in charge.

Note that despite the optimism, the fact that prices are now trading below the $230 support and sell trigger is a mark of bears. As such, and in line with previous ETH/USD trade plans, every pullback towards $230, which is previous support now resistance, is an opportunity to unload the coin at higher prices.

Ideally, and in a typical move, better reloading opportunities will be at $190 and $150 if sellers’ momentum is high.

Technical Indicators

Anchoring this trade plan is May 16 bull candlestick. With high trading volumes of 822k, the bar is visible and leading. Therefore, signaling the end of a retest will be a wide-ranging bull candlestick reacting either at $170-$190 support zone or $150 which is April low, distinct with high participation preferably exceeding 822k of May 16.

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Ethereum could dip to $144 before shooting to $170

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The new year has been good for Ethereum; ETH surged by nearly 42% in just over two weeks from the start of the year. However, the coin has dropped in value since then, and there are signs it could drop further. At the time of writing, CoinMarketCap showed Ethereum with a market capitalization of over $17.42 billion, with over $10.1 billion worth of ETH traded in the last 24 hours.

Ethereum 6-hour chart

Ethereum

Source: ETHUSD on TradingView

ETH has been moving through an ascending channel formation since late-December last year. While channels are usually continuation patterns, ETH‘s inability to subsequently touch the upper trend line in the middle could suggest a weakness in the pattern. Further, the 50-moving average was seen moving above the latest price candle, which could mean that ETH will breakout downward.

The 6h 200-MA was moving well under the price line, which could indicate a more bullish scenario in the slightly less short-term. The trade volumes appeared to spike as the price touched the trend lines, and a spike in sell volume in the next few days could push down to a higher volume node on the volume profile. However, with the 200-MA rising, it could provide

support to the price after ETH breaks down from the pattern.

This gives us a breakout target at $144.6, at the 23.6% Fibonacci retracement line, and a bounce back up from here could send ETH to the bullish target zone between $169.84 and $165.4, at the 61.8% Fibonacci line.

1-day chart

Ethereum

Source: ETH/USD on TradingView

On a higher time-frame chart, it looks as though ETH could be following a fractal. After a small rise in value in July and August, ETH formed an ‘eve’ like pattern, followed by a dip in September. Ethereum saw its value rise once again between October and December before falling into the same ‘eve’ pattern once more. This further enforces the idea that ETH might be bearish for the short-term, and could begin to rise into February.

Conclusion

Ethereum is likely to break down from the ascending channel pattern on the 6-hour chart, down to the $144.64 mark by the end of this month. This is can also be validated on a higher time frame, assuming ETH is moving through the prior fractal. The coin could bounce off the 6h 200-MA, up to between $165.4 and $169.84 as we enter the next month, and likely to $171 by mid-February.

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Harmony Kicks Off Migration From Ethereum and Binance Chains to Its Own

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Holders of the ONE token from the team at Harmony should make plans to swap their ERC-20 (ethereum) or BEP-2 (binance chain) tokens for the coin on Harmony’s blockchain if they want to be able to participate in staking and other network activities. 

According to a blog post shared Thursday, Harmon’s token swap is ready to commence, allowing current holders to switch to the company’s native asset.

“The native ONE token of Harmony blockchain will serve as the bridge for building an open platform without sacrificing performance, decentralization, community-based governance, and verifiable security,” the blog post said.

Harmony is a proof-of-stake blockchain that uses sharding with the aim of reaching extremely fast, large-scale settlement for millions of users. It raised $18 million in a token sale to strategic investors last year, followed by an initial exchange offering on the Binance Launchpad in May, selling an additional $5 million worth of tokens. 

For users of certain exchanges, this swap will be automatic. According to a source familiar with the matter, most ONE tokens already sit on exchanges.

Unlike some prior token swaps, such as EOS, there’s not a way for users to manually conduct the swap. Holders of either of the tokens will need to load them onto an exchange participating in a bridge with Harmony. Once on such an exchange, the

tokens can then be withdrawn, but they will only return as the ONE native coin. 

Token swaps were a major theme of 2018 coming out the initial coin offering boom, but they’ve been less common as more companies have shied away from selling cryptocurrency ahead of their functionality. 

According to a Harmony spokesperson, only Bitmax currently has the swap live as of this writing. Binance should be operating the swap as of Feb. 3.

The announcement also indicates other partners will enable the swap soon, including HonestMining (a staking service), and exchanges including Huobi, Gate.io and Kucoin. Holders will be able to earn additional ONE coins by staking, but they will need the native version to do so.

Harmony has also integrated with several hardware wallets for storage offline, such as Ledger and SafePal.

The Harmony network is live now, though not all the features are. For example, validating nodes remain permissioned, but this will eventually become open. Validators will be rewarded with new ONE tokens in reward for securing the network, under Harmony’s proof-of-stake system. 

Harmony had a pre-mine of 12.6 billion ONE tokens issued on the ethereum and binance chains, 36.9 percent of which was sold in the seed and launchpad sale. 

The company has not yet announced whether or not there will be a deadline to make the swap.

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Ethereum News Today – Headlines for January 24

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  • Ether is the highest correlated digital asset – Binance Research
  • Tezos is the least correlated digital asset
  • BNB, XRP EOS, and LTC showed high correlation

Ethereum News Today – a new study has been conducted to determine the coin with the most market correlation. This research was conducted by the research arm of Binance. The new research determined that Ethereum’s Ether (ETH), the number two largest digital asset by market capitalization, is the token with the title of most correlated assets over the last year in the crypto space.

According to the report, ETH had an average correlation of about 0.69, out of an overall total of the top 20 leading cryptos the report based their research on. The report also notes that digital assets that have a correlation of about 0.5 are regarded as assets that have a strong positive association.

However, it determined that assets with a correlation of about -0.5 are regarded as having a strong negative association. Assets with a close-to-zero correlation indicate a lack of a linear relationship between more than one variable, and for this analysis, it implies the returns of two separate assets.”

A Positive Correlation Means When Two Assets Move in Sync

Essentially, a positive correlation can be defined as a situation

where two digital assets tend to maintain the same direction in their movements. This means that when you invest in them you could be exposed to similar risks. On the other hand, a negative correlation is determined when a digital asset can be used as a hedge against the other crypto. Ether (ETH) is reportedly the highest correlated asset.

As stated above Ether had an average correlation that is a coefficient of 0.69 through the last year. The coin is consistently among the most correlated digital assets considering its appearance over the years. The coefficient began at 0.69 in Q1 before rising to about 0.72 in Q4.

BNB, XRP EOS, and LTC Showed High Correlation

Among the entire top 20 cryptocurrencies, the protocol known as Tezos (XTZ) was found to be the least correlated digital asset. Tezos claims this title having posted a median correlation that is a coefficient of 0.3. Generally, Blockchains that have smart contracts and dApps (decentralized applications) like NEO, EOS, and ETH all recorded higher correlation.

Meanwhile, the other cryptos that have shown a high correlation with the remainder of the market include BNB, XRP, LTC, ADA, and EOS. Other cryptos that posted a low correlation to the market include the likes of ATOM and LINK. All in all, the study notes the median correlation among the top cryptos dropped slightly in Q4 of last year.

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