New ETH Developments, But Not Enough To Save Price (Free)

Week 36: September 6, 2019

Every Friday we review ETH price drivers from last week and perform both sentiment and technical analysis to help forecast the future.

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Week 36: August 30 - September 6, 2019

Ethereum has continued to under perform Bitcoin (9.6%) this week, performing in line with Litecoin (3.7%) yet outperformed EOS (-0.2%) and Ripple (-1.3%). Last week we issued a SELL, and this week we reiterate the SELL for the following reasons:

Rating: SELL

ETH Market Cap: $18.39B

ETH Price: 2.9% ($168.83 to $170.82)

ETH Active Addresses: 13.9% (288.6k to 326.4k)

ETH On-chain Transactions: 8.0% (713.2k to 769.9k)

Technical & Sentiment:

  • Follow the price trend since early August, short any test of resistance

  • Market speculators will drastically push price action

Positive Price Drivers:

  • The addition of privacy features to ETH may be used by institutions who want the benefits of a blockchain transactions, but the privacy of paper transactions

  • The development of new tokens on Ethereum are stimulating demand for ETH as it is required to power the token transactions

Negative Price Drivers:

  • The ETH network is being congested by USDT transactions and Vitalik’s temporary solution is upsetting the community

  • A recent glitch in ETH node software allows for nodes on the network to be shut down by external forces, questioning the security of the network and validity of transactions

ETH Price Analysis:

On a macro level:

IF this happens, then we buy:

  • Ethereum Development Foundation launches a new transparency report clearing up concerns over their funding and spending

  • Bitcoin dominance declines and altcoins start outperforming BTC

IF this happens, then we sell:

  • ETH Istanbul launch get’s delayed again

  • The ETH 2.0 hype fails to gain traction by new developers entering the space and they commit to program for another smart contract competitor

ETH Sentiment: Let the speculators begin…

Price Drivers This Week

Third party developments have led to the addition of considerable value on the Ethereum protocol over the past week. As services like Ledger add native support for the spending of ERC-20 tokens, the velocity of funds may increase. In a twist for the public blockchain, Chainlink and MicroMix will be adding unique privacy features adding a new level of security to ETH. Over the course of the week there were also several negative sentiment drivers that reminded investors about the unique difficulties of internet money.

Finally, Privacy on Ethereum

Many Ethereum investors have been pushing the notion that Ethereum will be use for decentralized finance, or full financial freedom from fiat, through the use of decentralized loans and investing. However given the public and transparent nature of the Ethereum blockchain, personal data can be leaked from network data readily available.

To solve this issue, Chainlink has unveiled Mixicles which are embedded within their protocol to promote privacy. By obfuscating the data their oracles provide Chainlink will remove any possibility for personal connection and identification. Similarly, MicroMix is looking to address the same issue, but with additional features. With anonymous logins, anonymous DAOs, anonymous voting and jounalism, the entire decentralized world can be just as private as the real world.

In cryptography, privacy typically means there’s just high odds that an event won’t occur, not that it won’t. We have seen top coins like Monero be traced back to the original user even though its though to be the most anonymous coin at the moment. The addition of these new features on ETH are a start, but are far from being the final solution for the end user. For now, the best way to avoid the public learning about our private dwellings are simply to keep them off-chain.

Ethereum and Decentralized Finance

The launch of several new products around the Ethereum network are exciting many investors as to the future of the network and its uses. One main category of digital assets on the Ethereum network are those used in decentralized finance. As the total assets used for DeFi amass over 2.77M ETH or $500M in capital, this category is anything but slowing down.

PAX Gold

The addition of Paxos ERC20 compliant token, PAX Gold, will be the first New York State regulated gold-backed virtual currency. Through the tokenization of Gold, the transport of the value of gold is nothing more than several bytes sent over the internet. The use of the ERC20 token will allow for anyone with a complaint ETH address to receive this fully redeemable gold, all via secure electronic transactions, a miracle by many who have felt the weight of gold before. The ability to buy and hold gold via this methodology, is just one of many steps to creating a decentralized finance system.

Zero Coupon Bonds

Further aiding in the development of a truly decentralized financial world is the creation of yTokens, which represent zero-coupon bonds on the Ethereum blockchain. Users can create bonds by depositing Ethereum and selling them short to buy them back later. By using an interest rate oracle, the banking process can be fully automated, a trend expected to dominate the future of the industry. Should these financial products gain traction by institutions and larger investors looking to hedge their crypto positions, the industry may slowly mature and prices may become less volatile.

Positive Sentiment Drivers

Offchain Labs has opened up the Alpha version of its Ethereum (ETH) scaling solution, dubbed Arbitrum

Ledger adds ERC-20 support to Ledger Live; explores offering DeFi services

Negative Sentiment Drivers

New Parity Update Fixes a Vulnerability Present in Some ETH Nodes

Guy Takes One Week to Sync an Ethereum Full Node

Vitalik Buterin Mentions Ethereum Gas Limit Shift as Tether Ties Up ETH

What the top personalities on Twitter are saying

@bitangler with 12.9k followers believes ETH has bottomed out.

@Betting_Addict with 1,381 followers says ETH is looking very ugly here.

@trader_blitz with 1,740 followers believes ETH is ready to rise from here.

That’s it for the ETH weekly report from Aug 30 - September 6, 2019. Come back Monday for our Special Price in Review report.