Taking a Pounding – The Daily Gwei #69 The Daily Gwei

You may be thinking, what’s happening to the price of ETH lately? Why did it take a pounding and fall from $480 to $335 in ~6 days? Is the bear market back? Is crypto dead? Well, unfortunately, I don’t have all of the answers for you but apparently I’m really great at tweeting bullish things at the top of the market so maybe you can use that as a counter-trading signal in the future.

Alright so basically it really sucks that after feeling the wind change of a bull market ETH has already retraced 1+ month worth of price movements in just a few days (against both USD and the BTC ratio) and I wouldn’t blame you for feeling bearish. Though I think it’s always good to “zoom out” and look at the bigger picture – that is, I believe we are still in a crypto bull market and this recent drop was a healthy correction after the market got too heated (in hindsight, the food ponzis were a top signal). Even though I believe we’re in a crypto bull market, I think it’s still early days and we’ll probably see a slow grind up rather than parabolic moves like 2017 (for the time being, at least). The 1 week ETH/USD chart still looks pretty healthy to me (unless we repeat the “Black Thursday” dump in March but we won’t talk about that).

Image source: https://www.tradingview.com/chart/uYlPIQ7i/

Now, can the market keep dropping from here? Sure it can and the global macro environment doesn’t really inspire much confidence (stocks have also been falling). This part is what’s funny though – since the initial Black Thursday dump in both crypto and stocks, both asset classes have been closely correlated with crypto tending to follow stock market movements (albeit more aggressively in both directions). And I mean, are we really surprised? Did we really believe that the stock market recovered because of “fundamentals” even though the pandemic is still raging across the world and unemployment rates are at record highs? I guess we did since it’s really easy to get caught up in the hype of big market movements and forget about the context/bigger picture.

Going forward I think that crypto and the stock market will continue to be correlated in both directions though I don’t know which direction that’ll be of course. The U.S. Fed is pretty blatant about how committed it is to making sure that the stock market doesn’t fall too much (“stocks only go up”) but it remains to be seen how effective the plunge protection team can be in the long-term. Obviously crypto is global and not just limited to the U.S. but price movements definitely follow the U.S. markets (as they are still the largest in the world).

For now though, I would encourage anyone that is feeling down about price movements to close the charts and just focus on the technology (that’s what you’re here for, right?). There’s just too much happening in Ethereum to even worry about short-term noise in the markets. Also, shameless plug here, but you can subscribe to the EthHub Weekly Newsletter to get updates about Ethereum every single week – it’ll keep you satisfied on the journey to a $10,000 ETH!

Have a great day everyone,
Anthony Sassano

All information presented above is for educational purposes only and should not be taken as investment advice.

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