Ethereum (ETH) has continued to recover from the 47% pullback last week. The cryptocurrency’s market capitalization currently stands at US$104 billion, with US$2.7 billion traded over the past 24 hours.
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Transactions per day and block times have both decreased this week, and the pending transaction pool is essentially zero at this time. The popular cryptokitties Decentralized Application (dApp) had been driving much of the transaction increase throughout the end of 2017. Total auction sales of cryptokitties now account for US$19,215,092.24. Many other dApps are coming online in 2018, which may increase transactions dramatically.
Block times have decreased thanks to a continued rise in hashrate, despite mining profitability declining significantly. As difficulty rises mining profitability will continue to decrease, given a constant number of transactions. With more dApps on the horizon, miners may be attracted by rising profitability this year.
While many factors influence mining profitability, such as price, block times, difficulty, block reward, and transaction fees, the end game for ETH will be a switch from Proof of Work mining to Proof of Stake. This process is still in development, will occur through a series of hard forks, and will ultimately change the consensus algorithm with the release of Casper. The Casper testnet is currently up and running.
In an effort to combat hyperinflation, Venezuela will be issuing an oil-backed cryptocurrency, the Petro, within the next few days according to Information Minister Jorge Rodriguez. U.S. Senators Marco Rubio (R-FL) and Bob Menendez (D-NJ) blasted the plan, citing concerns over exploiting cryptocurrency for “nefarious purposes” which would “thwart the intent of U.S. imposed sanctions.”
State legislators in Virginia introduced a bill yesterday which looks to explore ways blockchains can improve “efficiency, cost savings, and cybersecurity.” A Chinese state-backed CryptoYuan is also rumored to be in development.
Russia recently announced plans for a CryptoRuble. Ethereum’s creator, Vitalik Buterin, met with Vladimir Putin in June of last year. The Canadian government is currently exploring possible use cases for bringing transparency to government funding with the ETH blockchain, while India joined the Ethereum Enterprise Alliance last year, which aims to nurture and enable further Ethereum based technologies.
On the exchange side, ETH trading volume has been led by Bitcoin (BTC), the US Dollar (USD), and the Tether (USDT) trading markets. South Korean Won (KRW) trading volume remains down sharply, likely due to regulatory constraints surrounding anonymous banking and trading accounts.
ETH has shown strong bullish momentum since breaking its multi-month ascending triangle consolidation in November. Trend continuation past the all time high, ~US$1400, can be analyzed with Fibonacci extensions, Ichimoku Cloud, and Exponential Moving Averages (EMAs).
On the weekly chart, since breaking the horizontal resistance at US$420, price has continued to push higher through several fib extensions. Should this trend continue, the next resistance level resides above US$1,500. The yearly pivots show resistance at US$1410 and US$1945 (not shown).
On the daily chart, the Ichimoku Cloud using singled settings (10/30/60/30) for quicker signals shows bullish continuation after a Kijun mean reversion. The psychological level of US$1,000 continues to hold. A bearish TK cross would indicate a long exit signal. A long exit was previously indicated with a fractal stop violation at US$1,087 on January 16th.
Also on the daily chart, using Ichimoku Cloud with doubled settings (20/60/120/30) for more accurate signals shows a strong likelihood of bullish continuation due to multiple Kijun bounces. A long entry is not explicitly warranted on this timeframe, if bids were not already placed on the Kijun.
On the four hour chart, a bullish reversal pattern, the Adam (V) and Eve (U), has formed with a descending volume profile. The pattern has a 1.618 fib extension and measured move of US$1,400 and US$1,558 respectively. A previous inverted Adam and Eve brought price below US$800. Price has also bounced above the 200EMA while the 50EMA has remained above the 200EMA indicating bullish momentum.
The Ichimoku Cloud on the four hour chart is showing a potential long entry within the next few candles. Price currently remains in the Cloud, the TK cross is bearish, and the Cloud is also bearish. A long entry would occur when all three of these metrics flipped bullish.
On the one hour chart, the 50/200EMAs are indicating a potential bullish cross within the next few candles with price breaking the 200EMA, prompting a long entry. The previous break of the 200EMA and subsequent 50/200EMA cross indicating a short entry signal in a similar fashion.
Lastly, the Cloud on the one hour chart is also indicating a long entry signal within the next few candles. Price is above Cloud, TK cross is bullish, and Cloud is bearish. A long entry would occur when the Cloud flips bullish.
ETH continues to inch its way towards a PoS scaling solution. While several developments remain pending, the move remains inevitable. The year ahead will continue to be a trailblazing opportunity for governments around the world to enter the crypto foray, some of which are already taking an interest in the Ethereum platform.
Technicals indicate a higher timeframe mean reversion support test, with lower timeframes indicating several confluent long entry signals. Targets include the previous record high and resistance levels above US$1,500.