1 May 2021 (SAT)- Ethereum (ETH) Daily Risk Report

1 May 2021 (SAT)- Ethereum (ETH) Daily Risk Report


Investment Disclaimer:

  • I am not a registered investment, legal, or tax adviser or a broker/dealer, and all opinions expressed by me are from my research for educational purposes only.
  • Past performance presented here is not an indicator of future performance.
  • This post expresses my own opinion about the cryptocurrency mentioned herein and is not an offer to buy or sell, or a solicitation of any offer to buy or sell the cryptocurrency mentioned in this post. 
1. Top 3 Good News for ETH HODLERS !!!
  • Ethereum (ETH) has a 6% Chance of Hitting $5k by June 2021
    Statistic as of 2021-05-01 10:43 AM EDT: 23 positive votes, 3 negative votes

    Ethereum’s chances of hitting $5k by June currently stand at 6% ETH has continued to maintain the $2,700 price area, into options and futures expiry today There is also the monthly close ahead which should be ETH’s last hurdle towards new ATHs On a fundamental level, Ethereum’s market cap has exceeded Paypal’s and could soon exceed Walt Disney’s The number two ranked digital asset of Ethereum...
    (Extracted from CryptoPanic)

  • Ethereum Flips PayPal, Nears Top 25 Global Assets by Market Cap
    Statistic as of 2021-05-01 10:43 AM EDT: 15 positive votes, 0 negative vote

    Ethereum now has a market capitalization of around $320 billion. That's enough to top one of the biggest payment firms in the world.
    (Extracted from CryptoPanic)

  • Ethereum Moves Toward ETH 2.0 With ‘Super Experimental’ Testnet
    Statistic as of 2021-05-01 10:43 AM EDT: 9 positive votes, 1 negative vote

    Steklo is a short-lived testnet designed to demonstrate one method for maintaining a proof-of-stake network.
    (Extracted from CryptoPanic)

2. How Ethereum Performs Relative to Other Cryptos ?

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As of 01 May 2021, Ethereum has made a cumulative return of 2116.98% since Jan 2020 and 379.8%  since Jan 2021. It is currently the 8th greatest performing crypto asset since Jan 2021 as compared to the other cryptocurrencies presented above.

3. Technical Analysis on Ethereum

3.1. Volume Weighted Average Price (VWAP)

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VWAP is a technical indicator used by a trader to gauge the overall trend of an asset price movement. VWAP line (orange line) represents the volume-weighted average price (average price here is defined as the average of high, low and close prices) while close price line (blue line) represents the price when ETH is closed at the end of every single day. 

Whenever blue line (close price) is above orange line (VWAP), it indicates that the asset is gaining momentum and being traded higher than its average price level. This would represent a 'buy' opportunity for short-term momentum trader whom task is to trade following the trend while a longer term mean-revision trader might take it as a 'sell' opportunity, anticipating that the price of ETH (blue line) to fall to its average level (orange line).

Whenever blue line (close price) is below orange line (VWAP), it indicates that the asset is losing momentum and being traded lower than its average price level. This would represent a 'sell' opportunity for short-term momentum trader whom task is to trade following the trend while a longer term mean-revision trader might take it as a 'buy' opportunity, anticipating that the price of ETH (blue line) to rise to its average level (orange line).

As of 01 May 2021, VWAP is suggesting that ETH is gaining a huge momentum and currently trading much higher than its average price range of $ 2,300 to $ 2,500 per ETH.

3.2. Moving Average Convergence Divergence (MACD)
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MACD is often used by trader as a momentum indicator. There are 2 lines that form the above charts, namely MACD (12, 26) lines and Signal(9) line, while the histogram is calculated by subtracting Signal (9) from MACD (12,26). Histogram would fall to the negative territory whenever MACD (12, 26) is trending at a lower level than Signal (9) and rise to the positive territory whenever MACD (12,26) is trending at a higher level than Signal (9).

MACD (12, 26) is computed by subtracting the 26-day exponential moving average (EMA) of ETH closing price from its 12-day EMA. 
Signal (9) on the other hand is calculated as the 9-day EMA of MACD (12,26). 

As MACD (12, 26) goes higher away from Signal (9), it signifies that ETH is gaining momentum and whenever it goes trends at a lower level than Signal (9),it signifies that ETH is losing momentum. 

As of 01 May 2021, MACD is suggesting that ETH is trading at a much higher momentum than its average.

3.3. Bollinger Band

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Bollinger band is often being used by mean-reversion trader as a gauge to assess how undervalued or overvalued an asset is. Its chart made up of 4 lines, namely:

- SMA (20) (blue line), which is the 20-day simple moving average price of ETH
- Upper Band (orange line), which is computed by adding 2 standard deviations of ETH on SMA (20)
- Lower Band (red line) , which is computed by subtracting 2 standard deviations of ETH from SMA (20)
- Close (green line), which is the daily closing price of ETH

Whenever close line (green) touches the lower band (red), it indicates that ETH is corrected too much and is being traded at an undervalued level, representing a 'buy' opportunity. On the other hand, whenever close line (green) touches the upper band (orange), it indicates that ETH is gaining too much momentum and is being traded at an overvalued level, thus indicating a 'sell' opportunity. 

As of 01 May 2021, Bollinger Band is suggesting that ETH is trading at an overbought level and subject to short-term retracement to its average price level of $ 2,400 to $ 2,600 per ETH.

3.4. Relative Strength Index (RSI)

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Just like Bollinger Band, Relative Strength Index is often being used by mean-reversion trader as a gauge to assess how undervalued or overvalued an asset is. There are 2 psychological levels, i.e. 30 and 70 in RSI. Whenever the RSI reaches 30, it indicates that ETH is corrected too much and is being traded at an undervalued level, representing a 'buy' opportunity. On the other hand, whenever RSI reaches 70, it indicates that ETH is gaining too much momentum and is being traded at an overvalued level, thus indicating a 'sell' opportunity. 

As of 01 May 2021, RSI is suggesting that ETH is trading at a fair value (i.e. neither undervalued nor overvalued).

Based on the technical analysis presented above, quantdoge thinks that ETH is overly bought and might retrace to a lower price level in the short-term, but I could be wrong, hence please make your careful due diligence before making any financial decision. 

4. Ethereum Risk Profile

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Based on the 100-day 95% historical Value-at-Risk (VaR) profile of Ethereum defined above, ETH seems to trade at a lower risk level on 01 May 2021 as compared to 10 days before on 21 Apr 2021, with its biggest pullback being seen at 21.47% on a single day during the last 100 days. However, I could be wrong, hence please make your careful due diligence before making any financial decision.

5. Price Simulation for Ethereum

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How did quantdoge simulation perform vs the actual ETH price movement over the last week ?

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Over the last 7 days, ETH has been trading in the higher price range of quantdoge simulations, indicating that ETH was trading near at an overbought level over the last week.

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If you are into Ethereum (ETH) and Chainlink (LINK), I have made similar analysis on them at:

If you like my analysis and articles, please follow me at @quantdoge for daily updates. 

 

 

 

 

 

 

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quantdoge
quantdoge

Data scientist in crypto and blockchain space.


Daily Crypto Risk Report
Daily Crypto Risk Report

This blog was created by quantdoge, a data scientist in the cryptocurrency and blockchain space to publish daily risk reports on different cryptocurrencies. All published reports in this blog were analyzed with in-house algorithmic trading and quantitative risk management technology. ** Investment disclaimer: ** I am not a registered investment, legal, or tax adviser or a broker/dealer, and all opinions expressed by me are from my research for educational purposes only.

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