RT @MihailoBjelic: "Bitcoin’s and Ethereum’s network values are down 81% and 93%, respectively, whereas demand for their respective native functionalities is down 74% and 7%, respectively.
In the case of Bitcoin, 26% of the network activity remains since the peak, while for Ethereum 93% remains." https://t.co/0bKL3w7xhv
It's always entertaining reading articles where people claim to have discovered some kind of fundamental. All he's found is some correlations, and he has little in the way of dependency between them. At the end of the day the value of bitcoin to USD makes no difference. Slightly more people want to sell bitcoin than buy, so the price is going down.
This is an interesting article. I agree that the price has overshot somewhat, and for similar reasons (the gap between new daily wallets and price being another indicator of anomaly). But the shockwave of this bear will take a while to recede, so for psychological reasons I don't expect we'll agree on the bottom for a few weeks yet, and the next rally won't even show the first flickerings for some months yet.
mat3_1 - 2 years account age. 200 - 1000 comment karma.5 months ago
There ain't gonna be no exploding this time around. Thousands of bagholding ICOs are in line to dump their ETH as soon as price sees a little rebound. The whales know this too which is why they aren't wasting any money to pump ETH when BTC is stable for a few days. They are mostly concentrating on other alts which are cheap af right now.
I think the assessment is correct (with a lot of bias and faith). The logic behind it is that the assessment becomes correct when the use case for Ethereum and other blockchain projects becomes more accepted and widely used by the common people, much like when the internet became a thing and became what it is today. I think the adaptation of blockchain will occur at a much faster pace than the internet though, possibly over the course of the next 5 years. That being said, then and only then will these projects start to show their true values and pry away from Bitcoins own valuation correlation.
clemons77781 - 2 year account age. 35 - 100 comment karma.5 months ago
This is an inaccurate representation of what he is saying. First off, he never claims to attempt to justify any sort of price action.
he simply compares the growth in Tx volume, Tx value, and unique addresses, and compares that with price changes. Prices have dropped significantly, while the three above things have not changed that much. If you read the article, he said this himself: These things are only extremely loosely correlated with price. They had as little to do with the run UP in price as they with its return to normalcy.
For anyone who claims that ETH should be valued at 13% less than 1,400... i have some $1,218 ETH to sell them...
“If you read the article,...” everything’s here, people don’t read anymore. They stop at the headline
Zacharaieee3 - 4 years account age. 200 - 400 comment karma.5 months ago
>For anyone who claims that ETH should be valued at 13% less than 1,400... i have some $1,218 ETH to sell them...
uptick in wallet addresses seems like a dumb metric. better off looking at active wallets.
Svelki1 - 2 year account age. 100 - 200 comment karma.5 months ago
I would hardly call any of these metrics “fundamentals”. They’re simply correlations in my opinion. Prices are not based on hashrate/daily transaction numbers; they’re based on people’s expectation of the future.
In traditional markets, people buy and sell based on profits and losses. Because of that, they are fundamental to the value of a stock. Hash rate on the other hand, people do not buy and sell bitcoin based off of it.
bro that is the DUMBEST thing ive ever heard on here. everyone on here is fuckin clueless gamblers that.. like holy shit u dont realize stocks are real companies that have expenses and profits and analysts measuring everything bc its calculable
Doesn't this assume that the peak prices were justified?
I don't think the network activity was growing as fast as the price during that run.
Mars19772 - 3 years account age. 300 - 1000 comment karma.5 months ago
Totally agree. I think with ethereum in particular float declined as icos locked up more and more coins. I think you want price times coins not locked in icos. To get the peak and run the same calc today. I wonder how much cap has fallen.
Ya, this is really stupid and pandering. I had a guy the other day justify how smart he was by saying 'I've lost millions this year, and I'm still in ETH!' I'm still up 600% from when ETH was $40. Why? Because I trade. I sold BTC for ETH when it was $40, 100% all in. Sold ETH for WeTrust and Odem, 3x from WeTrust, 10x from Odem. Sold ETH for Neo when it was $10. Sold ETH for BTC when it was $300. The only thing I did not do was sell for cash :(
The trick here is to objectively evaluate a multitude of situations and possibilities. Sure, at $85 I think ETH is 'oversold' on a 3-month timeline. But on a 6-month timeline, possibly not. ETH is NOT second place. Stellar going from $0.12 to $0.50 flips ETH down to 4th. What you will see in the coming months is some multimillionaire with ETH bags will pump the shit out of it to try and solidly retake 2nd place, or he goes busts. But this will absolutely remove all his liquidity. At that time SELL. Next time ETH dives (like in July), it may hit $20, who knows.
Do not fall in love, become financially smart. I made a lot with ETH, I contributed a lot to ETH. I made a lot with ICOs, I made a lot with Bitcoin. My only failure was not making more with cash - a lesson for next time. If ETH hits $300 again, I will tell you it will NOT be stable, and if you do not sell some, this is your mistake - and just rebuy right before PoS. That may not come until 2020 (or much later). It is not worth the risk bag holding for technology that may be delayed. Be smart - not a fanatic.
You may have made money, but that just means you took money from so many other people. All those people are the ones floating around out there complaining about how crappy crypto is and how they lost their money. They’re helping drive the price down and inhibiting adoption. Your greed is ultimately hurting the market that helped you out.
This applies to speculation and arbitrage: owning a commodity for the sole purpose of selling it.
If you buy low and sell high, you’re pumping value out of the active market. In the case of Eth/USD, you’re using Eth as a tool to pump USD away from other bank accounts and into your own...if you’re successful in that. This reduces the available fiat in the market to buy up more Eth, which reduces liquidity and adoption.
If that’s not the case - if you aren’t able to make a profit - then why trade? If you are making a profit, it’s because you’re pumping fiat and helping to knock out other possible economic actors.
I didn’t really come here to make arguments against trading, but here we are. If someone can give me good arguments on why trade isn’t self-defeating to a market, then I’d gladly change my conclusions.
What are you on about? The market wouldn't even exist without traders. Anything and everything in the world with value is traded. Gold, silver, energy, oil, drugs, art, land....everything is traded. Someone is always buying or selling on the market. By your definition, selling is an act of pumping fiat. That means nobody should sell which in turn means nobody can buy. In other words, there will be no market and economic activity will be stagnant. There will be no transfer or exchange of wealth.
I’m really just targeting the trade of commodities without the intention of producing or using those commodities.
Are you going to make an actual argument, or just cite history? Because history has not been well for speculation.
You can't get rid of speculation. It's human nature. If a commodity is priced at $100 today and you believe that it will be worth $200 next year, tell me you're not gonna buy it with a straight face. Retail stores don't buy or sell anything with the intention to use them. They buy so that they can sell tomorrow for X% profit. That's how the world works.
Stores provide a service. There’s value in stores and what they do. You can’t tell me that if you saw two guys, one with a supply, and another buying from the first guy and marking up the price, that you’d buy from that second guy. You’d go right to the first guy unless there was an advantage to the middle man (maybe he has exclusive access to the first guy). And yet, this is what speculators are: middle men not providing any service or value to the market. Their actions mess with market value and make it untrustable.
Speculation is not human nature. If it was, everyone would do it all the time. Delayed gratification has to be taught. Speculation is a secondary trait.
> Speculation is not human nature. If it was, everyone would do it all the time.
Everyone is doing it all the time. You think speculation is new? It has existed as long as markets have existed. Even the stock markets are ripe with speculators. If it weren't for speculators, all stock's prices would have corresponded to their earnings but instead it's usually 10-50 times their earnings because people speculate a company's earning will increase by that much in future.
> You can’t tell me that if you saw two guys, one with a supply, and another buying from the first guy and marking up the price
This is different from speculation. This is called reselling and it also happens all the time in the market. Resellers also serve a purpose. Offline resellers usually buy products from upmarket areas and then sell to areas where these products are not as easily available. Online resellers usually provide additional benefits like better UI and UX and better return policies etc.. At the end of the day, everyone is competing in the marketplace. Nothing wrong with that.
>If that’s not the case - if you aren’t able to make a profit - then why trade? If you are making a profit, it’s because you’re pumping fiat and helping to knock out other possible economic actors.
No idea, but I also have no idea what YOU are talking about. A market can not EXIST without trading, that is like the baseline definition of it...
My Grandfather smoked his whole life. I was about 10 years old when my mother said to him, 'If you ever want to see your grandchildren graduate, you have to stop immediately.'. Tears welled up in his eyes when he realized what exactly was at stake. He gave it up immediately. Three years later he died of lung cancer. It was really sad and destroyed me. My mother said to me- 'Don't ever smoke. Please don't put your family through what your Grandfather put us through." I agreed. At 28, I have never touched a cigarette. I must say, I feel a very slight sense of regret for never having done it, because your post gave me cancer anyway.
Nope. But, if you find it funny, feel free to have a laugh.
I know where I’m at. If you want to trade, and continue trading without damaging the market you’re trading in, you have to be a little less myopic and think of the total system effects.
Book reading is a tool to embarrass stupid people - I hope you have never partaken in that greedy scam.
arsch_loch1 - 2 year account age. 35 - 100 comment karma.5 months ago
Interesting. Actually this is quite consistent with this price prediction: https://enroyd.com/ETH_Predictions/
Those guys also predicted the price dump (although they were off by a week or two).... let's see.
I’d actually argue the reverse of the article.
The peak price was unjustified.
The real price should be 13% higher than the current price, and will occur when the activity level peaks.
Or we get another round of fomo.
Markets are almost never priced by current usage, but rather anticipated future use. For example stocks with a price:earnings ratio of 10:1 are very common.
A reasonable price estimate for ETH would be anticipated future use minus the estimated risk that some event will keep it from a realising that usage.
A p/e of 10 would actually imply very little faith of investors towards future growth of the company. A p/e of 10 would imply an annual return of 10% which is ridiculously high and everyone would buy that especially if they believed the company would grow further.
The long-term average p/e of the S&P 500 is around 16-17. Tech stocks frequently list at p/e levels close to 100 or even higher.
Yeah once matured, this will act like a utility company. Infrastructure is already built, low development, just collecting rent on tx and paying out ~~dividends~~ stake to stakeholders but I'd argue there is probably another round or speculation to drive prices up.
Inflation is irrelevant in the long term, what matters is fees. In the end, demand from fees buys the inflation too.
Only initially inflation is going to give most of the return, but that's almost certainly going to be coupled with a price rise.
Unfortunately, it's all 3 years in the future at the earliest
By intentional design, ETH is not simply a currency. Purchasing ETH is purchasing the right to use the Ethereum network and spend compute cycles. The Ethereum network has unique utility as a world wide, trust minimzed, cryptographically secured, smart contract execution platform. The value of stable coins on the Ethereum network may soon far outpace ETH itself. However, if Ethereum is widely used for smart contract execution and stable coin transfer, ETH will always have value as it must be purchased in order to use the network to perform any function. Unlike Bitcoin and many other cryptos, ETH has intrinsic value as long as the network is useful. That value is likely to grow and because of the above properties, would warrant considering a P/E ratio in value estimation.
Additionally, although I've never traded forex, I'd wager that forex trading doesn't not just involve current performance, but estimated performance over the next decade or so, probably based on anticipated GDP growth or some similar metric.
So, crpyptokitties clogged the network.
That shows a real cap on future use.
I don’t see us getting past cryptokitties level of network usage, because the bottleneck is the blockchain.
So since anticipated future use has a hard cap, the price is reflecting the limitation.
Just my opinion though.
> crpyptokitties clogged the network
It used about 5% of the network at a time when blocks were over 95% full on average.
> I don’t see us getting past cryptokitties level of network usage, because the bottleneck is the blockchain.
There is no limit on the gas price. For example if blocks are full of plasma settlements or otherwise valuable transactions demand for fees could go * 100 even without the incoming improvements to throughput. BTC is entirely relying on that happening to survive.
In the case of Bitcoin, 26% of the network activity remains since the peak, while for Ethereum 93% remains. The proxy of value for Bitcoin is 0.26² = .07, which implies a 93% drawdown in network value is justified. In the case of Ethereum, 0.93² = 0.87, implying a 13% drawdown in network value is justified, jaw-droppingly less than the 93% drawdown we currently see.
I believe Ethereum validated the whole crypto space and BTC was completely manipulated up to 19k (possibly by fake tethers). But as long as BTC is the main pairing for traders and ETH isn't being used commercially, then we're completely at the whim of BTC. We can only hope BTC doesn't completely shit itself in the meantime.. I personally believe the manipulation started when BTC was around $1000 but I'm hopeful that there were enough new buyers after that who won't sell at a loss to prevent it going much further down. I don't hold any BTC btw.