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Ethereum Price Analysis – Fundamentals are strong

Transactions per day and daily active addresses have increased slowly over the past month, while the number of unique ETH addresses is growing at a rapid pace.

Ethereum (ETH) is a distributed ledger and decentralized computing platform with smart contract capabilities. The crypto asset is currently second on the BraveNewCoin market cap table, at US$17.40 billion, with US$4.03 billion traded in the past 24 hours. The Ethereum spot price is down 89% from the all time high set in January 2018. However, ETH and the broader crypto market have shown significant signs of strength over the past month with a 23% gain.

Ethereum Price Analysis 12 April 2019 (1)

The ETH project was proposed in late 2013 by Vitalik Buterin, with a crowdsale occurring between July and August 2014. Other ETH co-founders include Anthony Di Iorio, Charles Hoskinson, Mihai Alisie, Amir Chetrit, Joseph Lubin, Gavin Wood, and Jeffrey Wilke. The ICO raised nearly US$16 million by selling ETH for US$0.31 each. The mainnet went live in July 2015 with 72 million premined coins, which currently accounts for 68% of the circulating supply.

Thus far, protocol upgrade milestones have included; Olympic in May 2015, Frontier in July 2015, Homestead in March 2016, Metropolis Part 1: Byzantium in October 2017, and Metropolis Part 2: Constantinople in February 2019. The next upgrade, Serenity, is currently in development but does not have an expected release date.

There are also ongoing discussions around ETH 2.0 development. The networks second iteration will include a full rewrite and redesign. However, both 1.0 and 2.0 will likely exist concurrently for several years before a complete migration is completed.

ETH 2.0 includes Sharding and Casper, which will drastically alter the network. Sharding refers to a scaling solution for horizontally partitioning data within a database. The full implementation of Casper, slated for release in 2022, will remove Proof of Work (PoW) from the network, leaving a Proof of Stake (PoS) block reward at 0.22 ETH/block. Currently, there are no plans to cap the total amount of ETH created.

Earlier this year, Vlad Zamfir, one of the chief architects of Casper’s PoS solution, revealed he was negotiating a research agreement with CasperLabs. Zamfir clarified that his “number one priority is obviously my work on ETH” and leaving was “never on the table.”

While the network is still PoW based, a proposal called Programmatic PoW (EIP-1057) has gained favor in the community and is likely to be implemented in the next hard fork, later this year pending a successful audit. ProgPoW is designed to reduce ASIC mining by making GPU and FPGA mining more efficient while decreasing the ASIC competitive advantages. Innosilicon and Bitmain both currently have three ASIC miners available for the Ethash algorithm, while a new ASIC mining chip from a third mining company, Linzhi, is currently in the research and development phase.

A potential consequence of the ProgPoW proposal is an ASIC mining community and manufacturer revolt. If implemented, EIP-1057 will make all current Ethash ASICs unable to mine on the ETH chain. Those using Ethash ASICs may choose to continue mining the pre-fork chain. Another possibility is that ASICs will be used to mine the Ethereum Classic chain, which also uses the Ethash algorithm. In any case, the goal of decreasing ASIC use on the ETH chain will be successful if EIP-1057 is implemented.

The Constantinople hard fork, successfully implemented on February 28th, included five other EIPs; lower gas fees for smart contracts (EIP 1283), improved scaling for off-chain transactions (EIP 1014), improved smart contract execution (EIP 145 & EIP 1052), a "Difficulty Bomb" delay for 12 months (EIP 1234), and reduced mining rewards from 3 ETH to 2 ETH per block (EIP 1234).

The difficulty bomb delay reset difficulty to levels last seen in January 2018 (dashed line, chart below), while the hash rate declined organically from November 2018 to mid-February 2019 (solid line, chart below). Hash rate remains near multi-month lows. Mining profitability is also near all-time lows but has begun rising in line with market prices. If ETH prices or mining profitability fall significantly, hash rate will likely follow suit.

Ethereum Price Analysis 12 April 2019 (2)

Average block times are currently 13.18 seconds, which is nearly the fastest in ETH history. The block count per day (line, chart below) has therefore increased to the highest level ever seen. There are 105,616,669 ETH in circulation with inflation per annum currently at 4.74% (fill, chart below), slightly higher than pre-Constantinople levels, but essentially the lowest inflation levels ETH has seen since its inception. Despite record fast block times, pending transactions have spiked from 1,000 to 12,000 over the past week.

Ethereum Price Analysis 12 April 2019 (3)

The network currently has 8,724 active network nodes, 41% of which are located in the United States. Due to the somewhat cumbersome hardware and time requirements of running a node, many of these nodes are run by Infura, or similar node servicers, who provide access to the network for developers. These services have become increasingly important for ETH as the blockchain continues to grow. ETH nodes have several sync modes, with fast sync requiring approximately 222.37GB of storage and a full archival node requiring nearly 2.49TB of storage.

The number of on-chain transactions per day (line, chart below) recently increased to nearly 700,000, up from a yearly low of 430,000. Going forward, a significant uptick in transactions per day would paint a bullish picture and also likely suggest increased dapp activity.

The average transaction value per day (fill, chart below) is currently holding just below US$850, which is sharply down from a high of US$20,000 in June 2017. If dapp activity increases, average transaction values will likely continue to fall.

The average transaction fee is currently about US$0.11, down from a pre-Constantinople level of above US$0.20. However, on February 19th and March 18th, the average transaction fee spiked to US$1.22 and US$0.63 respectively.

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The 30-day Kalichkin network value to estimated on-chain daily transactions (NVT) ratio (line, chart below) has increased to just over 46, which is nearing a three year high. A clear uptrend in NVT suggests a coin is overvalued based on its economic activity and utility, which should be seen as a bearish price indicator, whereas a downtrend in NVT suggests the opposite.

An uptrending NVT with a newly uptrending ETH price suggests that ETH is currently overbought or that the NVT metric may need to be retooled to better understand market variables. An NVT holding below 20 would likely signify bullish market conditions, as was the case from April 2017 to May 2018.

Daily active addresses (DAA) have increased to over 234,000, which is up from a yearly low of 192,000, and marks a four month high (fill, chart below). Overall, DAA remain well above levels seen throughout most of 2017. Unique ETH addresses continue to grow at a rapid rate, and are currently approaching 61 million (not shown). While addresses can never be deleted, this metric indicates a growing and sustained use of the ETH blockchain.

Furthermore, there are 321 ETH-related job postings in the U.S. on LinkedIn, down from over 1,000 postings in July 2018. There are almost 1.2 million members in 3,600 ETH groups on and almost 435,000 subscribers on Reddit’s /r/Ethereum.

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Globally, ICOs are also increasingly moving away from public sales, which is likely due to fear of regulatory reproach and shifting regulatory landscape. Initial Exchange Offerings (IEO), where crowdsales are facilitated by the exchange, are also increasing in popularity. However, these IEOs have typically had a native blockchain or do not use ETH.

ICO fundraising declined significantly towards the end of 2018 and through the beginning of 2019. However, 2018 saw both the highest number of ICOs, at 1,075, and the largest USD sum raised in one year, at US$21.48 billion. Thus far in 2019, there have been 80 ICOs raising a total of nearly US$800 million. In contrast, the total USD raise January 2018 was US$2.15 billion. Compared to the months of January and February, the month of March saw a slight increase in total funds raised.

On April 3rd, the U.S. SEC released a Framework for Investment Contract Analysis of Digital Assets giving additional guidance for ICO issuers beyond traditional securities regulation. Although the framework is guidance and not law, the document reaffirms that most ICOs likely represent securities, regardless of purported utility.

Earlier this week, the Token Taxonomy Act (TTA) was reintroduced in the U.S. House of Representatives, a bipartisan bill which aims to amend the Securities Act of 1933 and the Securities Exchange Act of 1934 to exclude "digital tokens from the definition of a security."

Jerry Brito, Executive Director of the Washington, D.C. crypto policy think tank, Coin Center, commented that the TTA will help provide additional clarity surrounding these securities regulations. Caitlin Long and Jake Chervinsky, both law-minded crypto personalities, disagreed, suggesting that the TTA would only create more regulatory uncertainty, not less, because the definition of a digital token under the TTA is difficult to apply. Additionally, Chervinsky argues, the TTA is "substantive change" rather than a "clarifying amendment," so the TTA only applies to tokens issued in the future.

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The top Ethereum based dapps over the past week, ranked by volume, continue to be led by gambling and exchange dapps. IDEX has had the highest number of transactions over the past week with more than 72,000. In the games category, MLB Champions, an NFT digital collectible dapp, has had the highest ETH volume over the past week while 0xUniverse, a space exploration game, has had the highest number of transactions.

Overall, ETH has a considerably lower number of users and transactions compared to other dapp platforms like EOS (EOS) and Tronix (TRX), both of which have no transaction fees. On February 9th, Twitter user Kevin Rooke pointed out that of the 1,375 ETH Dapps, 86% had zero users and 93% had zero transaction volume.

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As ICOs and crowd sales have faded in terms of both quantity and size, the Decentralized Finance movement, or DeFi, has increasingly gained in popularity. In total, US$436.9 million is currently locked into DeFi projects. Most of this held by lending dapps, with the MakerDAO (MKR) alone currently holding 2.08% of the circulating ETH supply.

Dharma, a lending platform, launched a non-custodial implementation of lending and borrowing this week where users can earn 2.5% yearly interest on ETH and 8% on Dai, a stablecoin created through the MakerDAO with a soft peg to the U.S. Dollar. The service provides crypto loans without requiring a bank account or credit check at a rate of 0.1% on ETH and 4% on Dai. Dharma is therefore subsidizing these lending rates.

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ICO treasury balances shrank significantly throughout 2018, both in USD value and in ETH quantity. December saw the largest outflows of the year at ~484,000 ETH. Thus far in 2019, ICOs have withdrawn 303,900 ETH from their treasuries. ICOs and dapps continue to hold 2.45 million ETH, or 2.60% of the circulating ETH supply.

In November 2018, Aragon, a project focused on decentralized governance, took a novel approach by moving 40,000 ETH into a US$1 million loan using the DAI a stablecoin, through the MakerDAO, to protect against market volatility. Aragon continues to hold nearly 815,000 Dai, valued at 4,810 ETH. This month, Aragon withdrew over 12,000 ETH from their treasury. The Aragon treasury continues to hold just over 164,000 ETH.

In December 2018, the Kyber Network, a decentralized token swap platform, saw outflows totaling 50,000 ETH, one of the largest of 2018. In March this year, Tezos withdrew 121,418 ETH, the largest withdrawal of 2019 thus far. DigixDAO, a project which has attempted to tokenize gold deposits, continues to hold just over 394,000 ETH, which is valued higher than the market cap of the entire DigixDAO project token. The frozen Polkadot wallet holds 306,000 ETH, which is the third highest holding of all projects.

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Turning to developer activity, almost 1,000 developers have contributed a cumulative 28,000 commits to the ETH project in 200 GitHub repos over the past year. Most coins use this development platform, where files are saved in folders called "repositories," or "repos," and changes to these files are recorded with "commits," which save a record of what changes were made, when, and by who. Although commits represent quantity and not necessarily quality, a higher number of commits can signify higher dev activity and interest.

Most of the commits over the past year have occured in the Solidity repo (top chart). Solidity is the programming language used to write smart contracts on Ethereum. The ETH 2.0 repo has also become active over the past few months (bottom chart), with most of the commits in this repo coming from devs Danny Ryan and Vitalik Buterin. Overall, ETH related repos have had more commits than any other crypto project over the past year.

Ethereum Price Analysis 12 April 2019 (10)

Ethereum Price Analysis 12 April 2019 (11)

In the markets, ETH exchange traded volume over the past 24 hours has predominantly been led by the Tether (USDT), Bitcoin (BTC), and U.S. Dollar (USD) pairs. Non-USDT stablecoin volume has slowly increased in recent weeks, including Dia (DAI), Paxos-Standard (PAX), Gemini-dollar (GUSD), and TrueUSD (TUSD), but continues to remain a fraction of total traded volume.

In Asia, the Korean Won (KRW), Yen (JPY), and Yuan (CNY) pairs have USD prices for ETH at US$166, US$164, and US$183 respectively. Together, all three regions show relatively low interest in their fiat pairs, with about 1.43% of the total traded volume combined.

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The over the counter (OTC) exchange LocalEthereum facilitated 2,873ETH in transaction volume over the past week, which is down slightly from earlier in the year. In comparison, LocalBitcoins exchanged over 12,000BTC last week according to

Throughout 2018, ETH traders on the exchange decreased while volumes increased. The two spikes in volume on November 25th and December 7th correspond with local lows in ETH price. The spike in volume on February 20th preceded the fork on the 28th. While traditional OTC desks often require a minimum order of between US$100,000 and US$250,000, these peer-to-peer marketplaces have no minimum order size.

Ethereum Price Analysis 12 April 2019 (13)

Google Trends data for the term "Ethereum" has increased slightly in recent weeks, although still remains at a multi-year low. Searches for “Ethereum” fell drastically throughout 2018 whereas a slow rise in searches for "Ethereum" preceded both highs in June 2017 and January 2018, likely signaling interest from new market participants at that time. A 2015 study found a strong correlation between the Google Trends data and BTC price, while a May 2017 study concluded that when the U.S. Google "Bitcoin" searches increased dramatically, BTC price dropped.

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Technical analysis

Volatility has increased dramatically over the past few days (chart below), signifying an end to a multi-month consolidation period. As the market makes a definitive decision on direction, roadmaps for price can be found on high timeframes using exponential moving averages (EMAs), Chart Patterns, volume, and Ichimoku Cloud. Further background information on the technical analysis discussed below can be found here.

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On the daily chart, the 50 EMA and 200 day EMAs have been bearishly crossed since June 2018. The previous bullish “Golden Cross” in May 2018 was overshadowed by a bearish reversal pattern, the head and shoulders. This key EMA cross is currently bearish, with the market confirming the 200 EMA as resistance several times over the past two weeks. The most prudent long entries will occur after a 50 and 200 EMA cross and after the 200 EMA is confirmed as support.

Since late last year, a bullish multi-month ascending triangle has formed. Hallmarks of the pattern include a series of higher lows with repeated rejections at a horizontal resistance. Over the past week, price has exceeded the horizontal resistance for the first time since November, signifying a bullish conclusion to the pattern. The 1.618 fib extension and measured move of the pattern range between US$212-US$250.

The long/short open interest on Bitfinex (top panel, chart below) remains 87% long, with long positions recently reaching record highs. Shorts have decreased significantly over the past few weeks and are currently sitting near all-time lows, based on the available data. A significant price movement downwards will result in an exaggerated move further, as the long positions will begin to unwind. This is known as a “long squeeze.” Lower pricing will likely find support at the 50 EMA and a high volume zone between US$138-US$147. There are currently no active RSI or volume divergences.

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Turning to the Ichimoku Cloud, four metrics are used to indicate if a trend exists; the current price in relation to the Cloud, the color of the Cloud (red for bearish, green for bullish), the Tenkan (T) and Kijun (K) cross, and the Lagging Span. The best entry always occurs when most of the signals flip from bearish to bullish, or vice versa.

Cloud metrics on the daily time frame, with singled settings (10/30/60/30) for faster signals, are 100% bullish for the first time in many months; price is above the Cloud, the Cloud is bullish, the TK cross is bullish, and the Lagging Span is above Cloud and above price. A traditional long re-entry occurred with a bullish TK recross above Cloud on April 2nd. Price recently returned to the Kijun, as is often the case throughout any given trend.

Ethereum Price Analysis 12 April 2019 (17)

Cloud metrics on the daily time frame, with doubled settings (20/60/120/30) for more accurate signals, are also 100% bullish for the first time in many months; price is above the Cloud, the Cloud is bullish, the TK cross is bullish, and the Lagging Span is above Cloud and above price. This is the first bullish Kumo twist since March 2017, which occurred when ETH was less than US$20. The Kijun or mean reversion point, currently sits at US$154, with price likely to test this zone before moving higher.

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Lastly, on the ETH/BTC pair, trend indicators are bearish. On the daily chart, Cloud metrics using doubled settings are newly bearish, with a Kumo breakout below the Cloud (not shown). The 50 and 200 EMAs are currently bearishly crossed with price tapping the 200 EMA twice this year, and currently sitting just below the 50 EMA. A bullish 50/200 EMA cross should act as a strong buy signal for many traders, if it occurs.

Despite the bearish trend indications, a reversal pattern known as the diamond bottom has formed over the past 220 days. Hallmarks of this pattern include a diamond shaped price structure with price spanning the top and bottom of the pattern multiple times. The pattern carries a measured move towards 0.055, which is also a previous local low of March 2018.

ETH/BTC open interest (top panel, chart below) on Bitfinex is almost exclusively dominated by long positions, with long positions at a yearly high. There is currently an active bullish RSI and volume divergence, as price made a higher low with a lower RSI and higher volume. Together, this suggests evidence of bearish exhaustion. In the near term, any bullish momentum is unlikely to drive to the 200 EMA at 0.0366 BTC and any bearish momentum is unlikely to exceed psychological and historic volume support at 0.025 BTC.

Ethereum Price Analysis 12 April 2019 (19)


Transactions per day and daily active addresses have begun to increase slowly over the past month, with unique ETH addresses also increasing at a rapid pace. Inflation has decreased with lower block times and with hash rate near yearly lows. The recent reduction in ETH issuance will not only affect the annual inflation but also mining profitability. If ETH prices remain low, many miners will no longer be able to mine ETH at a profit and ETH hashrate will likely stagnate or continue to fall. This will consolidate the remaining hashing power into fewer and fewer hands and may provide additional impetus for the ProgPoW EIP, which already looks to be a certainty by the end of the year. Although ETH 2.0 is still in the early stages of development, the changes are actively being discussed, debated, and coded.

ICO inflows and outflows remain down significantly compared 2018 but have slightly increased over the past month. Any ICO holding-related selling pressure is likely to continue until the next wave of potential Security Token Offerings hits the market. Globally, shifting regulatory clarity is pushing most crypto asset crowdsales towards private sales and accredited investors. As ICO ETH holdings have declined, decentralized finance ETH holdings have increased substantially, with multiple dapps increasingly gaining popularity.

Technicals are currently bullish to neutral for the ETH/USD pair and neutral to bearish for the ETH/BTC pair. Mid term targets based on active chart patterns include US$212-US$250 and 0.055 BTC over the next few weeks. The growing open interest imbalance on Bitfinex suggest the high potential for a pending long squeeze, which will result in an exaggerated move to the downside for both the ETH/USD and ETH/BTC pair. If price does fall dramatically, strong support currently stands at US$138-US$147 and 0.025 BTC.


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