It has become increasingly clear to me that ETH is simply in a beartrap rather than an actual pump. I will give you my reasons for this both from a technical analysis and a fundamental analysis approach.
The technical side:
It is very easy to be fooled into these beartraps and I guess it doesn't matter as long as you sell out at the top of them and buy back in now! There are two common features of a beartrap vs the true top of a pump and ETH adheres to both of them.
- During a beartrap the volume will remain high to the very top and will only decrease slightly during parts of the trap.
- Beatraps in cryptocurrencies usually display perfect market structure, with very nice, only slightly divergent double tops and returning to support of the final bear trap after the double top.
ETH has fullfilled none of these two characteristics. Buy volume remained high throughout the pump and there is no good market structure. One can argue that this is because it has been following BTC to a great extent through parts of the pump, but that seems rather unlikely, since it does not exhibit this characteristic even in BTC trading terms. There is currently a huge buyup of ETH at the lows, which makes me thinking that several large investors are also in the phase of accumulating ETH for a possible, much higher pump.
Fundamentals:
The most important about what we are seeing is the fundamentals. One could explain away the lack of a proper double top and insufficient structure otherwise through various news that has come out. It is however important to understand that although ETH has many other uses compared to BTC, one of it's primary uses is a store of value, in the same way as BTC.
Bitcoin have several, very important thresholds coming up and that was indeed why Bitcoin has pumped so high now. The anticipation of segwit activation has been the only reason why the price has been pushed this high. But the hardfork to Bitcoin Cash and possibly later also to Bitcoin Unlimited makes it obvious that these camps are going to erode the base value of the traditional BTC. Large mining companies have signalised that if segwit2x fails to be implemented in a few months, they will switch to Bitcoin Cash.
At the current date, not regarding inflation in any of the coins, it will only take ETH to get to the price of 0.176 BTC and the flippening has already happened. The psychological impact this will have, especially in these times of turmoil for BTC is not to be underestimated. That is a bit more than a double of the current price vs BTC. One could normally believe that ETH would just go down along with BTC, in essence reducing the overall marketcap of cryptocurrency, but I find that extremely unlikely. There is so much cash flowing into these markets now, and they will find their way into the next big thing very easily and essentially disconnect ETH from BTC.
If we consider that at in the moment of writing, ETH has about 18,5 billion USD market cap, whereas BTC has about a 46 billion USD market cap, it will only take Bitcoin Cash and Bitcoin Unlimited to take about half of that market cap combined and the flippening will be very close. Although most investors are probably going to dump most of their BCC right after launch, it is likely that if BCC gains support from the miners, we will quickly see a situation where things are getting out of hand.
Of course, ETH's own scalability issues could topple this easily if not dealt with. But I have a feeling, that if the flippening actually happens, BTC will not return to the throne for years, if ever. That is not saying ETH is the final solution, but at least for some time it's going to be the new big thing and a price prediction will only be possible to make after we have established whether the flippening will actually happen.