Welcome to the Three Ts with CoinJar. Each fortnight we explore a big Theme, an interesting Trade and some good, old-fashioned Technical Analysis (courtesy of Tom from trading gurus FX Evolution).
Emergent order
On a good day, Ethereum can process somewhere in the vicinity of 17 transactions per second. For a platform with pretensions to be the world’s computer, it can feel like bringing a horse-drawn cart to an F1 race – and then charging people $30 per ride.
However, we’re drawing closer and closer to the moment at which [dramatic music] everything changes.
It’s safe to say that the official launch of Ethereum 2.0 – now dubbed the Merge – is going to be one of the most significant things that has ever happened in the cryptocurrency space.
Sure, the change to Proof-of-Stake isn’t going to immediately solve the issue of gas fees. Sure, the transactions per second won’t immediately improve. But ETH 2.0 is the platform on which all the many scaling solutions already out there will come into their own – while making ETH itself a highly sought after, locked up, (potentially) deflationary token with a tiny fraction of Bitcoin’s environmental impact.
In the meantime, if you want to keep an eye on things here’s a handy countdown.
Follow the Do
A few weeks ago, Terra founder and cryptovocateur Do Kwon announced that Terra was going to buy somewhere in the vicinity of US$10 billion worth of Bitcoin to help prop up his algorithmic stablecoin, USD Terra ($UST) – an amount that would make them the single largest holder of Bitcoin behind Satoshi himself.
While the rationale and risks of the move have already been much discussed, Do Kwon simply started buying Bitcoin each day in chunks of US$125m. And the price started slowly going up. While US$125m might not be a huge amount in the context of an asset that does more than US$30bn a day, in the absence of a similarly large seller it shifted the scales in favour of the bulls.
Then they stopped and so did the price. Perhaps you’d call it correlation rather than causation per se, but at a time when macroeconomic headwinds and regulatory uncertainty are starving the broader crypto space of positive narratives, you could do worse than follow the whims of a very public and guaranteed buyer.
Crypto on the rebound
Hallelujah! Bitcoin has broken out of the range. As Tom from FX Evolution said last time, nothing really mattered until Bitcoin broke US$44k – and here we are.
The break was hardly what we’d call explosive, but we’ve already come back and retested the top of the range/0.382 Fibonnaci line with a hammer candle on the daily, which suggests there may be juice left for a move to US$48k. Close above that and US$52k is in sight.
In keeping with the theme of pre-Merge hype, Ethereum is looking even stronger than Bitcoin at the moment. We can see that the ETHBTC ratio has firmly broken out of its consolidation and looks hungry for 0.08.
The USD price is brushing up against the 200D EMA, an important pivot point. Break and hold above there and a shift to US$3,800 and perhaps even US$4k could be on the agenda.
CoinJar is Australia’s longest-running crypto exchange. Since 2013, CoinJar has helped more than half-a-million Australians buy and sell billions of dollars in cryptocurrency.
FX Evolution is Australia’s premier forex, stock and crypto trading community.