23 April 2021 (FRI)- Ethereum (ETH) Daily Risk Report

By quantdoge | Daily Crypto Risk Report | 23 Apr 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 3 Good News for ETH HODLERS !!!
  • Analyst Says Massive Altsummer Coming, Names Top Three Coins To Watch, Updates Bitcoin and Ethereum Predictions

    Statistic as of 2021-04-23 9:07 AM: 31 positive votes, 5 negative votes

    Cryptocurrency analyst and influencer Michaël van de Poppe believes altcoins will rally furiously this summer. Van de Poppe tells his 228,000 Twitter followers that, “altsummer” is on the horizon as Ethereum goes for new highs in its BTC pair. The analyst takes to YouTube to reveal which altoins he believes could provide traders the opportunity […] (Read more on CryptoPanic)

  • Ethereum Supply “Plunges” As Prices Leave Orbit To ATHs
    Statistic as of 2021-04-23 9:07 AM: 18 positive votes, 1 negative vote

    The supply-demand factor is pushing Ethereum towards undiscovered heights. At least, that is what appears to be the case as the world’s second-largest cryptocurrency climbs to a new all-time high just as its active supply across all the major crypto exchanges declines. Data fetched by CryptoQuant, a South Korea-based blockchain analytics platform, elaborated it further, […] (Read more on CryptoPanic)

  • JP Morgan is Now Hiring Ethereum and Blockchain Developers
    Statistic as of 2021-04-23 9:07 AM: 12 positive votes, 0 negative vote

    Investment firm JP Morgan Chase, which previously had a harsh stance on bitcoin and cryptocurrencies, is now joining many institutions adopting blockchain technology. (Read more on CryptoPanic)

2. Top 2 Bad News for ETH HODLERS !!!
  • EIP-1559 Might Not Lower the High Ethereum Transaction Fees: Report
    Statistic as of 2021-04-23 9:07 AM: 8 positive votes, 45 negative votes

    The transaction costs on the Ethereum blockchain are twice as high now than in 2017/2018 and the upcoming EIP-1559 upgrade might not lower them, a report says. (Read more on CryptoPanic)

  • Public Mainnet Launch For Ethereum Scaling Solution Delayed Until July
    Statistic as of 2021-04-23 9:07 AM: 11 positive votes, 45 negative votes

    It has been announced that Optimism, the Ethereum Layer 2 scaling solution, will be delaying the launch of its mainnet till at least July 2021. According to the official announcement, the new launch date is not certain as it still depends on the speed of preparations and “ecosystem readiness”. Changed Plans for the Optimism Mainnet […] (Read more on CryptoPanic)

3. How Ethereum Performs Relative to Other Cryptos ?

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As of 23 April 2021, Ethereum has made a cumulative return of 1851.94% since Jan 2020 and 332.25% since Jan 2021. It is currently the 7th best performing crypto asset since Jan 2021 as compared to the other cryptocurrencies presented above.

4. Technical Analysis on Ethereum

4.1. 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 (cross 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 (cross 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).

On 23 April 2021, VWAP suggest that ETH is gaining momentum and traded at a level higher than its average price range of USD 1,950 to USD 2,050.  

4.2. 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. 

On 23 April 2021, MACD suggests that ETH is losing momentum and currently trending at an average momentum. 

4.3. 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. 

On 23 April 2021, Bollinger band suggests that ETH is trading at a fairly normal level (i.e. neither undervalued nor overvalued). 

4.4. 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. 

On 23 April 2021, Bollinger band suggests that ETH is trading at a fairly normal level (i.e. neither undervalued nor overvalued). 

Based on the technical analysis presented above, quantdoge holds a neutral stance on the short-term price outlook of Ethereum, but I could be wrong, hence please make your careful due diligence before making any financial decision. 

5. 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 23 Apr 2021 as compared to 10 days before on 14 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. 

6. Price Simulation for Ethereum

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If there is no major news update in the next 7 days, quantdoge simulation shows that there is a slightly higher chance for Ethereum to retrace to a lower price level within the week than it is for it to rise to a higher price level. However, I could be wrong as my simulation is based on the assumptions that there would be no major news update nor fundamental changes on Ethereum within the next 7 days and the probability distribution for Ethereum to trade higher than its current level is equivalent to the probability distribution for it to trade at a much lower level. Please make careful due diligence before making any financial decision. 

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If you are into Chainlink (LINK) and Dogecoin (DOGE), 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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