Fundamental overview

Ethereum is an open-source, decentralized, blockchain-based platform where any developer can create and run dApps. Ethereum uses a peer-to-peer approach where each interaction happens between the users taking part in it without any involvement of the controlling authority.

The Ethereum is supported by a system of ‘nodes.’ Nodes are the volunteers who download Ethereum blockchain to their desktop to fully enforce the consensus rules of the system that keeps the network honest.

Such consensus is dictated by ‘smart contracts,’ which are designed to perform transactions within the network automatically. The terms of condition for both parties are pre-programmed into the contract. Once the terms are completed, only then the transactions are triggered.

The system also provides its users with Ethereum virtual machine (EVM), which serves as a runtime environment for the smart contracts based on Ethereum. It offers users the security which is needed to execute an untrusted code while making sure that the programs don’t interfere with one another. EVM is entirely separate from the main Ethereum network, and this makes it a perfect sandbox tool for improving smart contracts.

The cryptocurrency token that the platform offers is called ‘Ether.’ Ether is a digital bearer asset that doesn’t require a third party to process the payment. Ether not only acts as a digital currency; rather, it also fuels the decentralized apps within the network.

Ethereum cycle analysis

Ethereum, like most of the cryptocurrencies in 2019, has lost more than 39% against the flagship cryptocurrency-Bitcoin. A prominent crypto analyst believes that Ethereum price action resembles that of Bitcoin between 2015 and 2018. An analyst has also demonstrated that the ETH/BTC market has followed the exact same pattern during its past two cycles.

The unpredictability of the crypto market makes it difficult to determine what the Ethereum future holds. Now, after the Bitcoin halving 2020, crypto-enthusiasts are getting overwhelming bullish. However, some analysts doubt that Ethereum will follow the same growth as Bitcoin. Whether bullish or bearish, it’s crucial to have a risk management strategy to prevent adverse market conditions.

Ethereum (ETH)
$ 395.39
$ 11.03
⇣ 369.91
3 Aug
⇡ 395.41

Affecting factors

Ether has a great 2020 start. Last year ended with Ether being near $115, and it rose to $289 on Feb 15. There are several factors that affect the gains of Ether. According to the market, the observer’s ether has gone up due to the Bitcoin reward halving and the resulting rise in Bitcoin. There has been the anticipated release of ETH 2.0 and the breakout of the decentralized finance industry (DeFi), which has also affected the price of Ethereum.

In the second half of 2019, Ether plunged from $360 to $116. One of the biggest reasons for this price drop was the declining confidence of investors due to the Ethereum’s persistent scalability issues.

Ethereum back then was missing the deadline of major upgrade ETH 2.0, which is going to shift the blockchain’s current proof of work algorithm to proof of stake. However, now the developers have informed markets that the upgrade is going to be launched on the network’s fifth anniversary on Jul 30, 2020, which has again increased the confidence of the investors.

Decentralized finance (DeFi) space became popular in 2019, which tells that investors see DeFi as a replacement of traditional finance. MakerDAO, which is the largest DeFi project, is based on Ethereum blockchain. Thus with the growth of DeFi, the demand of the Ether may also be rising.

Trading with Elliott waves

Elliott Wave Theory was propounded by stock market analyst Ralph Nelson Elliott in the 1920s and 1930s. He believed that there are more common structures to markets than the chaotic form, which are mostly seen by other analysts of the time. Elliott observed that there is an impulsive wave which moves with the trend, followed by the corrective wave. He saw that there are five waves that make up a larger impulsive wave before the three-wave corrective phase. One’s ability to see the first five waves highlights the fractal nature, given that you are expected to see the same patterns on a larger and smaller time frame.

Elliott suggested that every action has a reaction; likewise, every impulsive move is followed by a corrective one.

The first five waves form the impulsive move, which moves in the direction of the main trend. The subsequent three waves later provide the corrective waves. Single-cycle is complete, once the 5-3 move is finished.