Ethereum (ETH) has had a relatively uneventful second half of January after pulling back 46% and recovering. The market cap now stands at US$106 billion with US$2.8 billion in trading volume over the past 24 hours.
After reaching its five millionth block earlier, ETH transactions per day and block times continue to decline, with about 5000 transactions pending currently. Despite decreasing transactions per day over the past two weeks, only Litecoin and Dogecoin have a lower network value to transaction ratio, suggesting ETH remains undervalued, based on its utility, compared to other coins.
The ETH supply per day has stabilized after the scheduled difficulty increase following the last hard fork. These adjustments are stepping stones to discourage Proof of Work (PoW) mining and encourage Proof of Stake (PoS). Some benefits of PoS include decreased electricity costs and decreased coin issuance.
Casper, the new consensus algorithm, will possibly be introduced as soon as the next hardfork. With difficulty increasing and mining reward competing with stakers, PoW mining will begin to fade entirely.
On the exchange side, ETH trading volume has been led by Bitcoin (BTC), Tether (USDT), and the US Dollar (USD) markets. South Korean Won (KRW) trading volume remains down compared to the previous months, likely due to regulatory constraints surrounding anonymous banking and trading accounts.
New wallet addresses continue to grow, likely due to continued ICO sales. Cumulative ICO funding now accounts for over US$3.7 billion. Although wallets cannot be deleted or destroyed and one person can open multiple wallets, sustained growth suggests sustained interest over time.
According to Google trends, search interest is down from its peaks in late 2017. Cities with the highest search interest around the world include San Francisco, Seattle, Amsterdam, Singapore, and Toronto.
ETH broke a multi month consolidation pattern in late November and has continued on a sustained bull run pushing ATH. Moving averages, Pitchfork, and Ichimoku Cloud can ascertain the strength and position of the trend.
Since the clean break from the ascending triangle, price has consistently bounced on the daily 50EMA. The Relative Strength Index (RSI) is also holding above 50, indicating continued bullish momentum. While a touch of the 200EMA, currently at US$550, is never out of the question for any trend, this is unlikely to occur immediately and price would need to show weakness at the 50EMA support first.
Pitchfork anchor points in July, September, and December show price bouncing in the heart of the expected trend. Price has consistently rejected the lower quartile, finding this zone as support. The Pitchfork suggests continued bull trend with the lower quartile being a strong buy zone. Price will consistently attempt to return to mean (red).
On the daily chart, the Ichimoku Cloud using singled settings (10/30/60/30) for quicker signals shows a bearish TK cross after a Kijun mean reversion. The psychological level of US$1,000 continues to hold. A bearish TK cross does indicate a long exit signal, although the ranging nature of price does muddy the signals on these settings. Another sign of weakening bullish momentum would occur if the lagging span (green) enters price. Long re-entry would occur with a bullish TK recross.
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. There is currently no long exit signal.
The price and Cloud fractal setup on the daily is very similar to Bitcoin’s previous price action before the bearish TK cross which resulted in bearish reversal. Should ETH price continue to pullback with a bearish TK cross on these settings, expect the same outcome.
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 and Cloud is bullish. A long entry would trigger when price closes above the Cloud with the Lagging Span above price as well. The previous Adam and Eve double bottom did spur a Kumo breakout but did not materialize in further bullish continuation on this timeframe, nor did it reach its target of US$1,400-1,500.
Lastly, the ETH/BTC ratio on the daily chart continues to push higher on weakening bullish momentum. Higher highs on lower volume and nearly lower RSI suggest the makings of a bearish divergence. A pullback near the 200EMA, Kijun, and yearly Pivot would be the expected zone of support. The distance between the Tenkan and Kijun lines of the Cloud also suggest a retrace has a higher probability than continuation.
Transactions per day and search interest remains down sharply compared to the Q4 2017. Development continues on steering ETH towards PoS from PoW. Global interest in ETH should remain high due to ICO demand. Technicals suggests continued bull trend with weakening bullish momentum. Staking speculators may be pushing price higher in order to accumulate for a masternode, although the amount of ETH required for a masternode has not been announced.