Why am I bullish on Ethereum?

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Sep 14, 2019

For the past few weeks I’ve been casually posting my thoughts on ether. Some posts can be found on twitter, others, on a few of the different discord servers I frequent. Overall, the responses have been lackluster to say the least, just what I was hoping for. Nonetheless, I figure now it might be worthwhile to offer a deeper look into what I have been watching.

For starters, let’s take a look at Ethereum miners balances over the past 30 months.

30 month view of 'Miner Balances Over Time'

Since January 13, 2018 when ETH achieved its all time high, the digital asset has shed roughly -87% of its USD value. On that same date, miners held a total balance of 466K ether. Now fast forward to September 9, 2019 when miners total balance reached 1.475 million, up 216.5%. Needless to say, it appears as though they have been accumulating at a parabolic rate, to say the least.

Speaking of accumulations, the following is a look at ether daily active withdrawals of from exchange addresses.

Ethereum Daily Active Withdrawals

I decided to label the Elliott Waves (as I see them) on this chart because I found it interesting to see where the peaks and valleys of DAW lined up with my count. By doing so, it appears as though withdrawals follow the pattern of crowd behavior that Elliot Wave Theory often calls for.

Notice how withdrawals declined between wave I and wave II, this indicated the crowds disbelief that an uptrend had finally begun. Then seemingly out of nowhere, a rapid increase as the larger degree III wave evolved. The rest very much following suit with the way a 3rd tends to look volume wise.

Finally within the circled area is the apparent local bottoming of the DAW downtrend.

Ethereum Daily Active Withdrawals

Here's another view with a bit less noise. Also, take a look at how withdrawals are increasing against current price action. Smart money positioning would be a logical thing to assume here, don't you think?

With that in mind maybe it's a good idea to check in on what smart money, or rather, large position players have been up to.

Total holders balance by number of owned coins

In my opinion, this dashboard falls into the same category as the miners balance dashboard does. Both appear to represent high level, large scale ether accumulation. Here we can see that addresses with a balance between 10k ETH and 100K ETH have added 1.44 million ETH to their reserves since the beginning of this year. With just north of 26.5 million total ether between those addresses, they presently control ~24.5% of total supply.

*It should be noted that since the beginning of this year the number of addresses that hold between 10k & 100k has grown from 992 to 1070.

Number of Holders by Number of Owned Coins

I think Joe Retail also needs to be recognized for efforts put forth in the noble cause of bullishness. The above chart shows the growth of addresses with a balance of 1 to 10 ether over the past 18 months.

So with accounts both large and small seemingly in accumulations, where might they stand from a P&L perspective? And could that information potentially have some predictive value?

60 day & 356 day MVRV Ratios

For that, let's look at some time bound MVRV ratios. Personally, I like to use 60 day & 365 day ratios. This helps me get an idea of where day traders may stand and where investors may stand. What I find curious about this chart are the divergences. Dating back to May, short term traders and long term investors have been out of sync with one and other. As it turns out this is also when trade volume peaked overall and began to decline. Now, since mid July, 60 day MVRV has been slowly moving back towards profit. Additionally, as of today, 30 day MVRV (not picture here) just poked its head above water for the first time since July 10th.

There you have it, a bit of a deep dive into some (not all) of what I have been keeping an eye on. With that said, be sure to keep in mind that everything I wrote in this insight is 100% correct, unless I'm wrong, which I may or may not be. And although I have been an expert in macro economics & emerging markets for the past 21 minutes, it is probably best that those reading this remember, don't take advice from strangers on the internet.

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Sep 14, 2019

Thanks for reading!

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