Throughout 2019, altcoins like Ethereum, Ripple, and others, have grossly underperformed next to Bitcoin, sans a few outliers like Chainlink, or Binance Coin, who had breakout years themselves in 2019.
But according to a very accurate-looking fractal on ETH/BTC price charts, Ethereum could soon break out against Bitcoin, helping to propel altcoins out of the gutter and back into a full-blown alt season.
ETH/BTC Trading Pair Fractal Hints at Ethereum Outperforming Bitcoin
The year of 2019 has been mostly about Bitcoin and its safe-haven narrative driving the price of the leading cryptocurrency by market cap up 350% at its high of $14,000. At its peak, the first-ever cryptocurrency was able to reclaim as much as 70% of the all-time high price it set at the height of the crypto hype bubble.
During Bitcoin’s highly-publicized meteoric rise, another crypto asset, the number two cryptocurrency by market cap, Ethereum, also reached its all-time high price of $1,400. However, throughout 2019, Ethereum was only able to regain 25% of the ground it lost during the bear market and downtrend.
But that may soon change, as according to a fractal shared by one well-known crypto analyst, the ETH/BTC trading pair price chart is exhibiting a price pattern fractal that very closely mimics a pattern that played out just before Etheruem had its first alt season, where the altcoin exploded in value against its Bitcoin ratio.
In the chart shared by the analyst, prior to the main, blue-underlined price action notated with 7 total waves, a miniature version of the price action can be seen, with the same exact peaks and troughs. In the tiny-sized version, following the sixth wave down, came a powerful, seventh wave up that sent the price of the asset skyrocketing.
ETH/BTC just completed what appears to be the sixth wave down once again, which could indicate that an extremely powerful wave seven upward is about to begin, causing Ethereum to greatly outperform Bitcoin for the foreseeable future as it makes up for ground it lost throughout the year against the first-ever cryptocurrency.
The last time this occurred, Ethereum helped drag the entire altcoin market upward, causing what most refer to as an alt season – or a period of time when altcoins trend and significantly outperform Bitcoin as a result.
Altcoins have long been oversold, reaching increasingly lower lows, and potentially signaling that a bottom is in against Bitcoin and a reversal could soon take place – all while Bitcoin continues to correct following the lonely parabolic rally it went on by itself during the second quarter of the year.
ETH/BTC is currently priced at around 0.02 on the ratio against Bitcoin, but such a move could take the ETH/BTC back to 0.16 or higher, where the trading pair peaked in early 2017.
Ethereum price analysis: Istanbul euphoria already over?
- The Istanbul fork happened on December 8 at block number 9,069,000.
- Users of the Parity Ethereum client faced a major issue as they were told to install an emergency patch to upgrade to the fork.
- The bears have knocked back all the gains that the bulls made post-fork.
Ethereum recently did the much-hyped Byzantium hardfork this Sunday, December 8. The fork happened at block number 9,069,000. Hard forks like these are integral to Ethereum’s development. Since the project is so vast, the developers had earlier decided to launch Ethereum is four stages – Frontier, Homestead, Metropolis and Serenity. The Metropolis hardfork was further subdivided into Byzantium and Constantinople. The Ethereum Foundation decided to do an extra fork called “Istanbul” prior to the Serenity update. The Istanbul hard fork itself will have two parts to it, with the second part of the fork coming around the first quarter of 2020.
What will Istanbul do?
The main objective of the Istanbul hardfork is to include more security fixes and incentives to move away from Proof of Work to Proof of Stake algorithm. The first part of the Istanbul hard fork will include six Ethereum Improvement Proposals (EIPs), labeled 152, 1108, 1344, 1844, 2028 and 2200. EIP 1344 will make the system resilient against Denial-of-service (DDoS) attacks. EIPs 1108, 2028, 220 will help reduce overall gas costs, while EIP 152 will increase Ethereum’s interoperability with equihash-based proof-of-work (PoW) cryptocurrencies such as Zcash.
What’s the aftermath of Istanbul?
Following the hard fork, the price of ETH/USD went up from $147.65 to $151 this Sunday. However, since then, the price has dropped back down to $147.50 as the bears have made a resounding comeback. The hashrate has also dropped from 172.741 Thash/s, which is the lowest since July 2019. This is particularly worrying because, in a proof-of-work system like Ethereum, the speed and security of the network are directly proportional to its hashrate.
Also, Parity, one of the most important Ethereum clients, announced that their users would need to apply an emergency patch before upgrading to the fork. 23% of Ethereum’s network runs using Parity. As such, not only did this delay the upgrade, but it could have also potentially caused a chain split.
George Cao, CEO at BitMax.io:
ETHEREUM COMPLETED ISTANBUL HARD FORK. CONGRATULATIONS @VITALIKBUTERIN AND @ETHEREUM ! BITMAX ANNOUNCED SUPPORT FOR THE UPGRADE ON DEC. 6, AND WE ARE HAPPY TO SEE THE HARD FORK HAS SEEN WIDESPREAD ADOPTION BY THE COMMUNITY.
WITH #ETHEREUM ISTANBUL NOW ACTIVATED, VERIFYING PROOFS IS MUCH CHEAPER. A GROTH16 PROOF VERIFICATION COSTS ABOUT 200K GAS (AND THEN 8K PER INPUT) AND PLONK SHOULD BE SIMILAR!
Jeremy Allaire, CEO of Circle:
WITH THE ETHEREUM ISTANBUL HF, ZK ROLLUPS NOW POSSIBLE AND WILL ALLOW LAYER 2 SCALING ON ETHEREUM SUPPORTING UPWARDS OF 3000TPS (LARGER THAN VISA), WHILE MAINTAINING DECENTRALIZATION AND PRIVACY. THIS IS A BIG WIN FOR ETH-BASED STABLECOINS #USDC
ETH/USD daily chart
ETH/USD is trending inside a triangle formation and is floating below the 200-day Simple Moving Average (SMA 200), SMA 50 and SMA 20 curves. The SMA 20 curve acts as immediate market resistance. The bears have taken the price back down to $147.50 from $151. The Elliott Oscillator has had five straight green sessions. The bulls will need to defend the $146 support level.
ETH/USD four-hour chart
The four-hour ETH/USD chart is trending within the green Ichimoku cloud in a downward channel formation. The market has found resistance at the SMA 20 and SMA 50 curves. The Moving Average Convergence/Divergence (MACD) indicates decreasing market momentum.
ETH/USD hourly chart
The hourly ETH/USD market has found support at the lower 20-day Bollinger band and the $147.15 line and bounced up. After that, it encountered resistance at the $147.75 line and then settled around the $147.50 zone. The SMA 200, SMA 50 and SMA 20 curves are floating above the market. The Relative Strength Index (RSI) indicator is trending around 40.60.
Developer Flags Big-Money Loophole for Stealing All the ETH in MakerDAO
What if there were a way to empty all the ETH held by the Maker protocol?
That’s $300 million worth of crypto right now. That’s a lot of money. Even if doing it caused the price to drop in half or even by two-thirds, it could still be well worth the attempt.
Micah Zoltu, an independent software developer who is also one of the co-authors of the original white paper for the decentralized prediction market Augur, published a blog post on Monday describing an attack on MakerDAO that, he argued, could empty all the ETH from the system. (Users lock ETH into the Maker protocol to generate loans of the dollar-pegged DAI stablecoin.)
The problem, Zoltu writes, is in how Maker is governed: “Some group of plutocrats can control how the system behaves.”
The attack would only be feasible for a few MKR whales if they wanted to act quickly. Zoltu said that 40,000 MKR would be enough if the attack had some sophistication. As of this writing, 48,400 MKR, based on the staking approach of the Maker voting system, could do it right away.
So somewhere between $20 million and $25 million in crypto would need to be deployed to do it. That’s assuming a person could accumulate MKR in a way that didn’t drive up the price, which is unlikely.
“It is worth noting that Maker Foundation could attack the system in this way right now if they wanted,” Zoltu writes. “What is worse, [venture capital firm] a16z has enough MKR on hand right now to execute the attack the patient way!”
Aside from an inside job by the parties most invested in seeing ethereum’s flagship decentralized finance (DeFi) application survive, accumulating enough MKR to carry out the attack may be a significant hurdle.
“I feel like it’d at least double the price,” Joey Krug, a partner at Pantera Capital who has been briefed on the vulnerability, said. “You could probably get a lot of whales to sell to you OTC [over-the-counter] if you were paying double market.”
On the open market, the price would “go bonkers, multiples of what it is now,” Krug said.
That’s only if the attacker had to start from zero MKR, though. So first let’s get into the attack that Zoltu describes and then circle back to the Foundation’s objections.
How it works
The Maker protocol is governed by the MKR token.
One million MKR has been minted, a sliver of that has been burned. The Maker Foundation still controls several hundred thousand, both in its treasury and in smart contracts that hold them in escrow.
One MKR sells for about $510 as of this writing. Daily turnover is quite variable but lately, there’s been about $4 million to $10 million in MKR turning over daily.
Anyone who holds MKR can put up a proposal as a smart contract on the protocol, one that can change any number of parameters. Maker uses continuous governance so that provisions can be voted to change at any time.
This is especially important right now because the system just made a major upgrade, implementing multi-collateral DAI and the DAI savings rate. This new upgrade is a whole new version of the protocol, such that there are really two kinds of DAI now and users are being asked to convert their old DAI (now called SAI) to the new.
The new system institutes some important security changes, such as a delay on how long it takes for changes voted through to go into effect and an emergency shutdown provision.
The biggest weakness allowing Zoltu’s attack is the fact that the current parameter for governance delay is zero seconds. That is, any governance provision that gets voted through goes into effect immediately.
This is something Wouter Kampmann, head of engineering at the Maker Foundation, said has been discussed in detail by the MakerDAO community, which has decided it is better to have zero delay for now while it determines which kinds of changes should be able to bypass the delay and which ones should still have a delay.
“It’s really a matter of finding that sweet spot there,” Kampmann said.
As long as it’s in place, though, Zoltu argues, the funds locked in MakerDAO are “not safu.”
In a call with CoinDesk, Kampmann said it would not be as simple as saying that all the ETH currently held as collateral by MakerDAO could just be directly moved to a wallet controlled by the attacker.
“The way permissionless, unstoppable code works is that there is certain business logic that determines the rules of how to interact with the contract – and these rules are unchangeable,” Kampmann said.
Zoltu admits it would take cleverness and planning, but at this point, readers who remember the DAO hack may be experiencing familiar chills. Your threat tolerance may vary.
The attack described by Zoltu would also need to be fairly fast. Kampmann expects that the governance delay may well be increased sometime in the first quarter, possibly in January.
Though it’s important to note that this decision is not up to him or foundation staff.
On the other hand
“You cannot just ignore the economics of it,” Kampmann said. “The problem with the model that’s set forth is really in the incentive model.”
There are a small number of whales that have enough MKR to execute this attack now, but they are extremely unlikely to do so. It would send shockwaves across ethereum and likely if they hold that much MKR, they would lose more in other assets than they would gain in stealing the ETH (which would likely drop in value too).
The best thing MKR holders who care about securing the protocol can do, according to Kampmann, is stake their MKR on votes. The more that’s staked, the more expensive this attack will be, and there is a lot of MKR on the sidelines right now.
Krug, who is well acquainted with the crypto investor class, acknowledged that MKR whales are probably well-intentioned, but he also said, “We can’t assume it for sure.”
There are over 16,000 ETH addresses with some MKR, however. If a bunch of minor whales were able to collude without warning the MakerDAO community, they might be able to assemble enough tokens without causing price movements.
The Maker Foundation said this would be very unlikely based on what’s known about MKR liquidity. That is, MKR just doesn’t move around that much.
But Zoltu insists this is not safe enough. He said, “They [the Maker Foundation] are operating under the assumption that there are no dark pools of liquidity available to attackers. This is, kind of by definition, something one cannot know.”
Ethereum is done with the downside – time to surge on: Twitter analyst CryptoWolf predicts
- CryptoWolf suggests that Ethereum’s break out of the seven months falling wedge pattern is a bullish scenario.
- Ethereum completes the Istanbul upgrade allowing for interoperability with Zcash.
The Ethereum network recently completed the Istanbul network upgrade. The upgrade was the eighth following other upgrades such as Spurious Dragon and Constantinople. Some of the upgrades brought to the network by Istanbul are Ethereum and Zcash interoperability and allowing contracts to introduce more creative functions.
Meanwhile, Ethereum is trading at $149.45. The support discussed earlier at $150 gave in allowing for a shallow downside correction. The current technical picture is static and suggests that sideways trading will take center stage.
Read more: Ethereum market update: ETH/USD held above $145 as recovery stalls in the $150’s range
Ethereum price prediction
A popular cryptocurrency trader and analyst, CryptoWolf says that Ethereum has completed its share of the downtrend and is ready to reverse the trend. In other words, the seven months falling wedge correction is over and the resistance is already out of the way.
– 7 months Falling wedge correction
– 3 months MACD bullish div.
– Momentum already broke out of its resistance
Requirements: patience. ♂️ pic.twitter.com/MU4pde07UR— CryptoWolf (@IamCryptoWolf) December 8, 2019
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