Ethereum Upgrade May Not Be Forthcoming
The entire cryptocurrency market entered a correction in tandem with Washington’s probe of Facebook’s Libra plans. While Libra is not that important in the grand scheme of things it is a catalyst for selling the market has acted on. No where is this correction more evident than with Ethereum, the cryptomarket’s #2 coin by market cap. Ethereum is suffering from more than a technical correction though. The move has so far removed 45% from ETH’s recent price high and the signs are not good, a deeper correction is brewing.
The deeper move is centered on Ethereum’s fundamentals. The Ethereum development community has been working on Ethereum 2.0 for a long time and its release was expected early next year. Ethereum 2.0 will create a highly standardized network crucial for blockchain interoperability. Interoperability is, of course, crucial to virtually all of the scaling and security upgrades expected to come with the Ethereum 2.0 upgrades. The upgrades will come in phases, the first is Phase 0 which many had thought would launch January 3rd 2020.
The bad news is that Ethereum’s development community clarified earlier comments by one of its members. The new perspective has dashed hopes for an easy rollout of the much-needed and long-anticipated network changes. Among the many issues still to be resolved are thorough testing of the new system, verification of deposit contracts, making sure clients are ready, and standardization of existing infrastructure. According to sources the timing of these events appears to be OK but no concrete date has been given. In light of the many delays and setbacks over the past few years this trader is not holding his breath in wait. I’ll be happy when ETH 2.0 is launched but until then I am skeptical.
ETH/USD began its downdraft in late June and quickly confirmed reversal in early July. The peaks at $350 and $315 are not bearish in themselves but the correction is confirmed as reversal with the break of support at $275. Just after that break prices made a quick consolidation while traders queried what to do next. The answer to that question was sell and that brings us up to date. The pair is now bouncing off of a possibly support line but don’t count on a bottom or quickly reversal. The move lower was strong and that shows in the MACD. The MACD is convergent with the low which is a sign of market continuation, the new low is an extreme and a sign of market strength.
In this light it looks probable we’ll see ETH/USD continue moving lower in the near to short-term. The price action is consistent with this outlook and points to a drop to the $175 region. This projection is based on the magnitude of Ethereum’s fall from $275 support to what looks like new resistance at $225. If this moves gains momentum a deeper fall, to $125, is very possible.