Crusher of the Month – Ethereum – September 2018 - Crush Crypto

Crusher of the Month – Ethereum – September 2018

In the Crusher of the Month series, we will write about a coin/token that we have the most conviction in each month. The time frame will be around 1 month, or until we publish the next Crusher of the Month. In September 2018, our Crusher of the Month is Ethereum, ticker ETH.

This is more of a short-term tactical trade where we believe the current sentiment on Ethereum is extremely bearish and is due for a rebound, especially if altcoins gain market dominance over bitcoin in the short-run. We believe the negative sentiment is already priced in, so the reward to risk is attractive at this price level.

Most of our readers are already familiar with the coin, which is the currently the second most valuable cryptocurrency. So let’s dive right in.

Why do we like it?

Recently, there has been a lot of negativity surrounding Ethereum:

  • TechCrunch published an article saying "the collapse of ETH is inevitable”. 
  • Bitmex published a post saying it is a double digit shitcoin.
  • We went to Singapore during blockchain week and talked to some OTC desks, and learned that there were a lot more sellers than buyers of ether.
  • ICOs that raised in ether need to periodically sell the coin in order to maintain runway for their project.
  • As a general smart contract platform, Ethereum has a lot of competitors promising better platform (most of them promise faster, more scalable solution with some compromise in decentralization and/or security), such as EOS, Cardano, Tezos, Zilliqa, and more.

As a result, ETH is trading below what it was one year ago and the price has been very volatile recently. At one point, it was overtaken by XRP and became the third most valuable cryptocurrency. In terms of diluted market cap, ETH is also behind Stellar Lumens.

At times like this, it is important to focus on the fundamentals. We believe Ethereum still has a strong network effect that is difficult to overcome and innovation that is needed to maintain very competitive.

  • Vitalik recently proposed a new scaling solution to potentially reach 500 transactions per second through mass transaction validation.
  • There are numerous layer 2 solutions, including Plasma, state channels (implemented by Loom, Funfair, Spankchain, etc.), that are already live or close to being deployed.
  • Strong developer community – Devcon 4, a conference for Ethereum developers, was sold out in seconds. The vast majority of tokens are built on top of Ethereum.
  • Unmatched liquidity after Bitcoin – a lot of exchanges have trading pair in ETH alongside BTC, so investors are accustomed to trade using ETH. We believe this is a huge network effect that other coins have a hard time to overcome.
  • The network keeps improving. The Constantinople hard fork is expected to hit the Ropsten testnet on October 9, 2018. It will then be implemented on the main chain soon after Devcon 4 in early November 2018. 

Again, this is a more tactical trade because the sentiment for ETH is extremely bearish in our opinion. This sentiment causes investors to ignore the solid fundamentals that the coin has.

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