In brief:
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.
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.
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.