In brief:
- According to Timothy Peterson, Ethereum could lose up to 50% of its value in the next 12 months.
- He explains that ETH’s long term growth rate only supports an annual appreciation of 30%.
- Ethereum had a hard time keeping up with Bitcoin as BTC pumped above $12k.
- ETH’s price is slightly above the $400 support are and looks set to dip further.
Timothy Peterson of Cane Island Alternative Advisors has postulated that Ethereum’s price could fall by as much as 50% in the next 12 months. Mr. Peterson shared his analysis of Ethereum via twitter and explained that ETH’s long term growth rate only supports an average annual price appreciation of 30%. Below is his analysis of Ethereum shared on the social media platform.
Pessimistic about #Ethereum price for the foreseeable future. Long-term growth rate only supports average annual price appreciation of 30% per year. $ETH could lose 50% in the next 12 months. pic.twitter.com/jBdApEAWXG
— Timothy Peterson (@nsquaredcrypto) August 21, 2020
Ethereum’s Price is Higher Than its Metcalfe Value
In the tweet, is a set of four charts with the first one (above) indicating that the price of Ethereum has deviated quite a bit from its Metcalfe Value. By eyeballing the chart, it can be observed that Ethereum’s Metcalfe value is around the $250 area. This value is very much close to an earlier estimate of $246 provided by the team at Cane Island via the following tweet.
#Ethereum pic.twitter.com/XozaNvRqZM
— Cane Island Digital (@CaneDigital) August 12, 2020
What the Ethereum Chart Says
A quick glance at the Ethereum daily chart reveals that ETH had a hard time breaking the $450 resistance zone as Bitcoin flew past $12k earlier this week. Ethereum’s short term correlation to Bitcoin has been dropping and could be one reason $450 was not broken as Bitcoin hit a yearly high of close to $12,500.
Furthermore, and from the chart, the $400 price area is acting as Ethereum’s current support with $365 also offering an area of interest should this level fail. Below $365 is the $290 support zone which is a bit closer to the current Metcalfe value of Ethereum.
Additionally, the daily Ethereum trade volume is in the red indicating selling pressure. The daily MACD has crossed in a bearish manner above the baseline further confirming the possibility of ETH’s price declining in the days and weeks to follow.
As with all analyses of Ethereum, traders and investors are advised to use adequate stop losses and low leverage when trading ETH on the various derivatives platforms.