11 May 2021 (TUE)- Ethereum (ETH) Daily Risk Report

11 May 2021 (TUE)- Ethereum (ETH) Daily Risk Report

By quantdoge | Daily Crypto Risk Report | 11 May 2021


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 Good News for ETH HODLERS !!!

  • Analyst on Litecoin and Ethereum: Don’t squander this opportunity now that it’s finally here
    Statistic as of 2021-05-11 11:41 AM EDT: 27 positive votes, 1 negative vote

    The second-largest cryptocurrency by market cap continued with its impressive 2021 performance by registering yet another ATH over $4000. With a significant market dominance, the largest altcoin has witnessed an exponential surge in volumes traded over the past few months.  Recently, analyst, Rekt Capital shed light on a trend for ETH/BTC pair which was last […]
    (Extracted from CryptoPanic)

  • Most Traders Will Miss Incoming Ethereum Tsunami, Says Analyst Benjamin Cowen – Here’s Why
    Statistic as of 2021-05-11 11:41 AM EDT: 24 positive votes, 0 negative vote

    Crypto quant analyst and influencer Benjamin Cowen says most traders will miss out on Ethereum’s “tsunami” price action. In a new strategy session, Cowen tells his 373,000 YouTube subscribers that Ethereum will continue to build strength despite most traders predicting that ETH will have a major market correction. “Remember, most will underestimate how far Ethereum […]
    (Extracted from CryptoPanic)

  • Mark Cuban Says Game Changer Could Cause Ethereum Price To ‘Blow Up’
    Statistic as of 2021-05-11 11:41 AM EDT: 24 positive votes, 3 negative votes

    Billionaire investor and business tycoon Mark Cuban is unveiling a game-changing catalyst that could catapult Ethereum to even greater heights. In a new tweet, the Dallas Mavericks owner tells his 8.4 million followers that Ethereum (ETH) has the potential to take over the world of business. “The reason ETH has a chance to blow up […]
    (Extracted from CryptoPanic)

2. How Ethereum Performs Relative to Other Cryptos ?

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As of 11 May 2021, Ethereum has made a cumulative return of 3051.4% since Jan 2020 and 547.44%  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 11 May 2021, VWAP is suggesting that ETH is trading very much higher than its average price range of USD 3,400 to USD 3,600.

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 11 May 2021, MACD is suggesting that ETH is trading at an increasingly greater amount of momentum.

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 11 May 2021, Bollinger Band is suggesting that ETH is trading at an overbought level (i.e. overvalued) level.

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 11 May 2021, RSI is suggesting that ETH is trading at its fair value (i.e. neither overbought nor oversold).

Based on the technical analysis presented above, quantdoge thinks that there is a downside risk on ETH in the short run, 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 11 May 2021 as compared to 10 days before on 01 May 2021, with its biggest pullback being seen at -11.92% 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 beyond the higher price range of quantdoge simulations, indicating that ETH was trading at a highly overvalued level over the last week.

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If you are into VeChain (VET) 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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