ETHEREUM CLOSING THE GAP: Huge Inflow As ETH Threatens $5,000!
It’s been documented that we profiled Bitcoin in the early stages, when BTC was in the triple digits and there were only a handful of HOLD-ers out there. Today, of course, it’s a different story entirely the headlines declare all-time highs in the Bitcoin price.
There’s nothing inherently wrong with the analysts and mainstream press suddenly declaring that they’re bullish on cryptocurrency – better late than never, right? Besides, we’re nowhere close to the saturation point and there’s still plenty of room for Bitcoin’s adoption, along with the BTC price, to move higher.
It’s no coincidence that just as the analysts are suddenly talking about cryptocurrency in a positive light, they’re also waking up to the reality that inflation isn’t going to just go away. The “transitory” inflation narrative has been dead and buried for a while now – even the Federal Reserve is backpedaling now on this issue.
As the price of just about everything goes up, it’s a sure sign that investors need to move at least some of their wealth out of the U.S. dollar, and into something that the government can’t print. Bitcoin fits that description perfectly – but it’s not the only one.
Just as we called BTC’s rise to $65,000 before it happened, we were also pounding the table for Ethereum – the so-called altcoin that deserve more attention than it gets.
Some folks were discouraged when the ETH price touched $4,000 during the summer but then retreated. That pullback was actually an opportunity, and hopefully people listened when we maintained our bullish position on Ethereum, which turned out to be one of our best calls of the year.
This chart is one which cryptocurrency traders should pay more attention to. Just as bullion investors should closely monitor the gold-to-silver ratio, crypto traders should keep an eye on the ratio of Bitcoin to Ethereum.
While we’re not expecting the ETH price to equal the BTC price anytime soon, that gap is closing, as you can see in the chart. Both in the longer and shorter terms, Ethereum has been playing catch-up to its more famous counterpart.
And, just as the gold-to-silver ratio going down means that you might choose to buy more silver, the ratio of Bitcoin to Ethereum going down is a signal to consider going long on ETH or adding to your position.
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Moreover, since Ethereum is a highly useful digital asset in creating other altcoins as well as NFT’s, we could consider ETH to the silver to Bitcoin’s gold, just as silver is the more useful of the two metals for industrial purposes.
Also of interest is the recent drop in big-money “whales” controlling the ETH price. The chart below shows a major divergence between the Ethereum price, which is obvious going up, versus the number of wallets/addresses holding 32 or more ETH:
This is meaningful in a couple of ways. First, it demonstrates that Ethereum isn’t simply being manipulated by a small number of large-scale traders – rather, it has the backing of retail investors as well.
Plus, the chart indicates that the number of large ETH wallets addresses, shown by the blue line in the chart, has come to rest on a support level and is likely to catch up to the gray line (the Ethereum price) when the “whales” inevitably rotate back into ETH at some point.
Still, just as they always have in the past, Bitcoin and Ethereum are likely to continue moving in tandem to some extent. That’s also bullish for ETH, though: as the Bitcoin price target is necessarily raised to $100,000 now, Ethereum at $10,000 is a very reasonable objective.
And that assumes a continuation of the current 14-to-1 BTC-to-ETH price ratio. Our target for Ethereum can certainly exceed $10,000 if the ratio closes even further than it already has, and that’s not an unrealistic expectation.
Either way, it’s not a question of “either/or” when it comes to Bitcoin and Ethereum. They’re both viable allocations during this time of rising inflation, and it’s perfectly acceptable to own both BTC and ETH in your account.
So, feel free to mark this date and these price predictions – and don’t be too shocked if the “experts” on TV are forced to raise their targets again, before 2021 is through.
Chief Editor, CrushTheStreet.com
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