Ethereum Rally - Dead-Cat Bounce or True Price Action Reversal?

The Good:

Vlad Zamifir, Ethereum developer, Creates Sharding Prototype

• Proof-of-Concept code available on GitHub
• Allows for faster communication and message sharing across Ethereum blockchain through second layer scalability
• Sharding addresses scalability issues

5 Exciting Ethereum Airdrops on Their Way

• AXEL
• CYBR
• ScientificCoin
• Infinitus
• BioCrypt

Ethereum Project Using DAI as “Bank”

• DAI was launched in December 2017
• Since then it issued over 3,270 loans worth $114M
• The structure of the loans is CDP (Collateral Debt Position) which means Ethereum is put down as a collateral.
• In case the debtor can’t pay, the smart contract will sell Ethereum in order to cover the loan.

The Bad:

20% Drop in Ethereum Hashrate

• The Ethereum hashrate has dropped from 294 Terahashes/second (TH/s) to 264 TH/s which matches lows recorded in February.
• Largest drop in the Ethereum hashrate since its invention in 2015
• This means mining Ethereum has become unprofitable to many miners who either turn off their GPU’s or start mining other cryptocurrencies
• Issuance will be reduced by 33% which means miners will earn 33% less in fiat currency for their mining operations
• Ethereum has reached cost of production floor after dropping below $170 before staging a comeback

Technical Weakness in Ethereum Remains

• Bearishness in Ethereum remains with several key technical indicators continuing to flash red
• Volatility set to surge as more derivative contracts are touted for Ethereum
• Miners are shutting down due to collapse in price as competing coins try to swoop in with increase in financial backing

Ethereum came back from the dead after dropping to an intra-day low of $164.12 on September 12th 2018. Bitcoin remained stable near the $6,500 mark. Ethereum has led cryptocurrencies lower as many new coins have been created using the Ethereum blockchain. Many creators decided to cash out after completing successful ICOs and dumped Ethereum on the market, often in favor of Bitcoin or Tether. Following the sharp drop, a counter-trend move was expected across the cryptocurrency sector.

Here are two key questions for miners, holders and traders of cryptocurrencies:

• The owners are cashing out, why do you keep holding your assets without diversification?
• Is this a dead-cat bounce or a true price action reversal?

A lot of investors and traders in cryptocurrencies have never seen any real money. They see their digital balances rise and fall with the price of their crypto assets which in most cases means Bitcoin or Ethereum. The creators of a lot of Ethereum based cryptocurrencies will continue to dump Ethereum on the market in order to save what real cash they can. The real world still runs on fiat currency which for the time being makes it irreplaceable. This should at the very least make traders think about diversifying their holdings and if done correctly this will lead to a rise in their overall portfolio.

PaxForex offers cryptocurrency traders a fantastic opportunity to diversify their assets just as creators are cashing out. You can fund your forex trading account at PaxForex with Bitcoin and Ethereum and smart traders understand the importance of working with fiat currency. As volatility remains high across cryptocurrencies, it is smart to take opportunities in order to diversify by making deposits into your PaxForex Trading Account.

This serves three purposes:

• It diversifies the cryptocurrency portfolio and makes assets less vulnerable to a single sector. Smart diversification is a very important practice in long-term portfolio growth creation.
• After making a deposit, PaxForex offers traders a great, professional trading environment where the fiat portfolio can grow in size. This will play a crucial part when it comes to asset reallocation. Regardless if traders wish to deploy their own trading strategy, BTCUSD and ETHUSD are available to trade, use an EA, copy other traders or decide to follow forex trades outlined in the PaxForex Daily Fundamental Analysis and PaxForex Daily Forex Technical Analysis, with PaxForex all the necessary tools are present to grow your portfolio.
• Once cryptocurrency prices drop to solid support levels, traders can opt to take part of their profits earned at PaxForex to buy more cryptocurrency. Once the price increases, simply deposit back into PaxForex and keep earning.

Ethereum Rally - Dead-Cat Bounce or True Price Action Reversal?

Given the overwhelming amount of negative news, fundamentally and technically, this may end up being a dead-cat bounce. This means that prices bounce off of lows, run into resistance and reverse back to the downside with new lows in mind. While the Ethereum rally from below $170 to above $220 in a short period of time was remarkable from a percentage perspective, it was largely fueled by short-covering which then attracted bargain hunters. Many refer to this as a suckers rally.

From a technical perspective, Ethereum could have extended its advance into the $246 - $250 zone before a bullish collapse. Traders should now watch out for a breakdown below $200, as a sustained move could push this cryptocurrency to new lows for 2018. A sustained move below $134.75 could result into much bigger issues for Ethereum as it would enter into a new trading range which could see price action drop below $100 and equal a psychological breakdown with new net cash-outflows at a time in-flows are desperately needed.

Recommendation:

Sell the rallies in Ethereum above $220 and deposit your proceeds into your PaxForex Trading Account. Use this time to earn money trading fiat currencies and wait for prices to test its previous low in Ethereum. Monitor price action and await further analysis or conduct your own. Bearish sentiment in Ethereum is currently too large to simply wait it out. Earning money in the process is the smart approach.