Liquidity Driven Startup Collapse Effects ETH (2500 Coming Soon)
Updated
Background - with Fed raising rates and BTC below 39600, this POV holds.
EXECUTIVE SUMMARY - access to cash becomes harder --> small tech firms fail (i.e. tokens on ETH blockchain) --> demand for ether lessens (the latter two are a cycle) --> price for ether drops...viability (sustainability argument ensues - this determines the bottom, I am not smart enough to predict)
Point of View
1. Whether war, fed rate hikes, global recession, commodity prices, stimulus money being withdrawn...there will be less and less liquidity (cash available to invest) in global markets. We are seeing this "argument in the markets where fast (smart?) money is stepping away, even though it has no safe low yield home for its cash.
2. ALL blockchains not BTC. Most are simply tech startups. They have founders, boards, developers, branding/marketing, management, etc. The BC world is moving SUPER fast. You must develop or die. These businesses need cash and LOTS of it.
3. Tokenomics - as token prices fall, tech firms have no shares to sell to raise working capital.
4. As cash (liquidity dries up, these firms let developers and others go). Better options appear for developers, they start to leave, etc.
5. As tokens fail (tech startups), ETH is used less, less demand equals lower price. Rinse repeat.
6. This failure is already happening. BTC remains strong (relative to the market). ETH, relatively, for now. All other coins are rip an drop. The truth is, ALL market participants are praying they survive at these prices until the next halving run of BTC. They talk about it like this run is fact. Perhaps...perhaps not.
7. The volume on small coins is epically small (I mean you EOS, XLM, VET, SUSHI).
8. If you believe that finance and governments
NOTE: I believe in blockchain as a tech paradigm supporting transaction-based software licensing (better than the used car rev model now) and I definitely see a world where ERP applications are in the same blockchain...removing the need for costly integration, providing global reporting, etc. I believe in BC as a method of creating forced or limited inflation, as governments have proven themselves to be unwilling to be disciplined. We are still in the early to mid-innings of tech, but blockchain as a tech is infantile and market "fans" are acting like it is a viable tech.
For reference of BC maturity:
- BTC is an 8 column, publicly accessible, secure XLS with unsustainable energy usage requirements
- ETH is a 25ish column, publicly accessible, secure XLS that runs a "macro" called smartcontracts
- NFT has a very bright future but its applications are also infantile
EXPECTED ACTION
For this I am watching the weekly chart for price action, although, I noticed the monthly weakening several months back (2 losing months in a row, lower than the prior two months). Running a fib retracement from the 11/8/21 high to the 1/17/22 low, shows we retraced 50% and rolled over. This makes the 2500 level a magnet with all that is going on in the equity markets (the 100 week EMA is also at that level). If that does not hold, we will drop to the 200 week EMA and roughly 1850 support line. If that doesn't hold AND blockchain/ETH viability is questioned at large (the boo-birds will be out for sure), than we will look for somewhere between 1500 and 500. YES - I know you are all thinking "never", I would buy it if...Perhaps, but the liquidity requirements have changed in a material way. BC has never seen high-rates, recession, war. This is a paradigm-driven analysis. The ONLY silver lining is that in a fear driven collapse, people MIGHT look to purchase fixed supply, limited supply, instantly available, totally transportable currency...but that is BTC, not ETH and it is something we have never seen before. Possible, intellectually attractive, but extremely unlikely.
What happens when EOS, XLM, etc fail? Where do all of its immutable records go? That is coming.
NOTE2: ALL crypto has ONLY existed in a world of ever-increasing free cash. That paradigm is OVER. I am not saying all MUST crash, but I simply see a liquidity-driven startup collapse coming...
LAST NOTE: I am a HUGE fan of crypto (decentralized and NOT used by controlling, self-interested entities), do not mistake this for "the end is coming" it most-certainly is not.
EXECUTIVE SUMMARY - access to cash becomes harder --> small tech firms fail (i.e. tokens on ETH blockchain) --> demand for ether lessens (the latter two are a cycle) --> price for ether drops...viability (sustainability argument ensues - this determines the bottom, I am not smart enough to predict)
Point of View
1. Whether war, fed rate hikes, global recession, commodity prices, stimulus money being withdrawn...there will be less and less liquidity (cash available to invest) in global markets. We are seeing this "argument in the markets where fast (smart?) money is stepping away, even though it has no safe low yield home for its cash.
2. ALL blockchains not BTC. Most are simply tech startups. They have founders, boards, developers, branding/marketing, management, etc. The BC world is moving SUPER fast. You must develop or die. These businesses need cash and LOTS of it.
3. Tokenomics - as token prices fall, tech firms have no shares to sell to raise working capital.
4. As cash (liquidity dries up, these firms let developers and others go). Better options appear for developers, they start to leave, etc.
5. As tokens fail (tech startups), ETH is used less, less demand equals lower price. Rinse repeat.
6. This failure is already happening. BTC remains strong (relative to the market). ETH, relatively, for now. All other coins are rip an drop. The truth is, ALL market participants are praying they survive at these prices until the next halving run of BTC. They talk about it like this run is fact. Perhaps...perhaps not.
7. The volume on small coins is epically small (I mean you EOS, XLM, VET, SUSHI).
8. If you believe that finance and governments
NOTE: I believe in blockchain as a tech paradigm supporting transaction-based software licensing (better than the used car rev model now) and I definitely see a world where ERP applications are in the same blockchain...removing the need for costly integration, providing global reporting, etc. I believe in BC as a method of creating forced or limited inflation, as governments have proven themselves to be unwilling to be disciplined. We are still in the early to mid-innings of tech, but blockchain as a tech is infantile and market "fans" are acting like it is a viable tech.
For reference of BC maturity:
- BTC is an 8 column, publicly accessible, secure XLS with unsustainable energy usage requirements
- ETH is a 25ish column, publicly accessible, secure XLS that runs a "macro" called smartcontracts
- NFT has a very bright future but its applications are also infantile
EXPECTED ACTION
For this I am watching the weekly chart for price action, although, I noticed the monthly weakening several months back (2 losing months in a row, lower than the prior two months). Running a fib retracement from the 11/8/21 high to the 1/17/22 low, shows we retraced 50% and rolled over. This makes the 2500 level a magnet with all that is going on in the equity markets (the 100 week EMA is also at that level). If that does not hold, we will drop to the 200 week EMA and roughly 1850 support line. If that doesn't hold AND blockchain/ETH viability is questioned at large (the boo-birds will be out for sure), than we will look for somewhere between 1500 and 500. YES - I know you are all thinking "never", I would buy it if...Perhaps, but the liquidity requirements have changed in a material way. BC has never seen high-rates, recession, war. This is a paradigm-driven analysis. The ONLY silver lining is that in a fear driven collapse, people MIGHT look to purchase fixed supply, limited supply, instantly available, totally transportable currency...but that is BTC, not ETH and it is something we have never seen before. Possible, intellectually attractive, but extremely unlikely.
What happens when EOS, XLM, etc fail? Where do all of its immutable records go? That is coming.
NOTE2: ALL crypto has ONLY existed in a world of ever-increasing free cash. That paradigm is OVER. I am not saying all MUST crash, but I simply see a liquidity-driven startup collapse coming...
LAST NOTE: I am a HUGE fan of crypto (decentralized and NOT used by controlling, self-interested entities), do not mistake this for "the end is coming" it most-certainly is not.
Comment
BTC got denied at 39,600-ish. All crypto is heading lower. Yesterday was a one-time event, the selloff today is not. In fact, today is only the beginning. Arguably a turning point in all markets, as the death of the debt-bull is now clear to the bulls. However, we are at the bottom of the channel (see image below) and booking profits is as important as making them. Sell AT LEAST half at or around 2668 and short again higher.
Nothing goes down in a straight line.
Comment
Expecting a rip to wrek some shorts. I am long ETH with a TIGHT STOP. Would expect to see this prior to the futures opening, but I am also expecting a different feel to next week. Markets are too bearish ITM.
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