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The Crypto Crash Continues, Spotlight Focus on Ethereum and Altcoins

Ethereum is right on technical support and there is no fundamental or technical reason for that support to hold.
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Ethereum weekly chart courtesy of StockCharts.Com, annotations by Mish

Ethereum weekly chart courtesy of StockCharts.Com, annotations by Mish

Technically Speaking

  • Ethereum is testing support at the 1700 level for the fifth time.
  • In bear markets, repeated tests of support are overwhelmingly likely to break 
  • The next support level is 1250, then 600, then the 300 area

Fundamentally, the major driver of cryptos is not energy, not the hash rate, not payments, not currency. 

The fundamental driver for the price of Bitcoin and all of the Altcoins is speculative sentiment. 

Major debates along those lines took place on Twitter yesterday. 

What Backs Cryptos?

Flight to Safety?

Sentiment Will Determine the Price

Hashing is irrelevant over the long haul. Sentiment will determine the price of Bitcoin. If the overall desirability and willingness to hold Bitcoin drops, so will the price. That is a statement of fact.

Ethereum Hash Rate

Ethereum Hash Rate 2022-05-27

Please compare the hash rate of Ethereum to the price. Let's do the same for Bitcoin.

Bitcoin Price vs Hash  Rate 2022-05-26

The hash rate has been meaningless for six months. The desire to hold Bitcoin has gone the other way. 

Sentiment Crashing Across the Board

Market Watrch Crypto Bitcoin

 That could be just day to day randomness. But it isn't.

Basket of Top Cryptos

Basket of Top Cryptos 2022-05-28

You can track over 100 cryptos at CoinMarketCap.Com.

I excluded stable coins because they are supposed to be stable, but TerraUSD associated with LUNA is now trading around 2 cents, down 98%. 

If diversification was supposed to help, it didn't. 

Please note Dogecoin was started as a joke and pumped up spectacularly by Elon Musk. 

How Many Cryptocurrencies Are There?

There are over 18,000 cryptocurrencies in existence as of March 2022. 

The vast majority of them are headed to zero if indeed they are not already at zero. 

Looking Back

Looking back, the early Bitcoin and Ethereum investors are still laughing about this decline as if it is nothing. 

One could have bought Bitcoin under $1. Even if one bought at $1,000 they are up about 28 times on their money.

For those who got in this year, the declines are very real.

I have certainly been wrong about how much these have risen. Then again, I underestimate nearly every bubble.

The prophets look brilliant on the way up. Every decade has a new set of them. Cathie Wood and her ARK fund is one of the new cheerleaders.

Here's an amusing set.

Scroll to Continue


Reflections on Prophets Touting Baskets 

Provable Network Effects

"I just took a small weighting, like 20% of my portfolio, which is now 100% crypto... So I bought a basket..." - @RaoulGMI #RugPal's Basket: Solana, Avalanche, Terra Luna. Those ones have provable network effects."

A small basket became a 100% basket. 

Hellen's Financial Advice

Do Kwon is the founder of LUNA and alleged "Master Stablecoin". He has over 1,000,000 followers on Twitter. 

LUNA is down 100% and his stablecoin 98%.

I would appreciate the advice from Hellen more if it came out before LUNA went to zero. 

However, Hellen's advice is still pertinent. Do Kwon just launched LUNA2!

Seven Percent Free Money on LUNA2!

Staking trapped people in LUNA unable to get there money out for 21 days. LUNA went to zero in a week. They were paid 20% for putting up LUNA. They got back their LUNA plus 20% more LUNA. But 0 + 0 = 0.  

Best Luna Strategies

Here's an amusing flashback on how to get 36% staking LUNA.

LUNA2 Update!

What a Hoot!

Where to Now for Cryptos?

The question, as always, is not where we've been but where we are headed. 

Every time I look at lists like the one I posted, I ask myself the same question: Why are they worth anything at all?

But they will always be worth what someone is willing to pay for them. 

Bitcoin advocates believe there is only one true coin, Bitcoin. They label the rest "sh*tcoins". 

But ultimately, the price of all the coins will not be determined by hashrate, alleged scarcity, or the latest favorite hype (alleged ease at moving alleged money). 

In El Salvador, Bitcoin is officially legal tender. Hooray! But who uses it for that? Almost no one and I am confident almost no one ever will, globally, as any meaningful percentage of transactions.

Even if 100% of the transactions in El Salvador were in Bitcoin, the price of Bitcoin will not be set in El Salvador. 

Rather, the price of Bitcoin will be the price people are willing to pay globally, in the midst of a global liquidity crunch.

End of the 40-Year Bull in Debt and a “Global Depression” Threat

And speaking of a global liquidity crunch, please consider End of the 40-Year Bull in Debt and a “Global Depression” Threat

Also see Where is the Price of Bitcoin Headed and What's the Fundamental Driver?

This post originated at MishTalk.Com.

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