In Part I of this collection, I mentioned how some traders and builders have questioned whether or not EOS posed a menace to Ethereum. Particularly, would EOS ‘kill’ Ethereum? Would EOS deliver each blockchain exercise and its worth to zero?
I mentioned how the pace issues with EOS can have an effect on the scalability of Ethereum, each as a result of it lacks the transaction capability and since the pace straight impacts usability. As an example, some initiatives that want a quick transaction pace could select to not develop on Ethereum, and even to maneuver current initiatives from Ethereum to EOS.
Nonetheless, I additionally challenged whether or not all initiatives wanted this pace and supplied a perspective the place many gamers can exist in any product house, together with platform cash.
The attitude final week was from the perspective of my life and expertise in design and product technique. On this installment, I needed to return at this query from the angle of a dealer, not simply that of a retail investor like I’m, but additionally from the angle of huge and institutional merchants.
Many traders take a look at potential blockchain investments from a elementary perspective: Which initiatives are compelling? Which initiatives have an incredible staff in place? Few traders appear to return on the market by asking which cash shall be an excellent commerce, or have the mechanics to work as a tradable asset
Liquidity is King
In case you are a big dealer, you don’t simply spend your time taking a look at a challenge, or solely finding out its chart. It’s important to concern your self extra deeply with liquidity than retail traders and merchants. Can you progress into the commerce with out shifting the worth an excessive amount of? Are you able to exit a commerce primarily based on the liquidity out there, or are you more likely to get trapped able?
On this foundation, fingers down, Ethereum has a bonus over EOS. I checked out 30 days of quantity as listed on CoinMarketCap. Ethereum had a median 24 h turnover of over $1.eight billion, whereas EOS got here in averaging over $700 million. Which means that over 2.5 instances extra quantity was turned over in Ethereum every single day. Additional, Ethereum trades in additional fiat pairs than EOS. That is vital if a big dealer wants to flee a sector-extensive downdraft.
I’m, nonetheless, not clear how a lot of this quantity is because of Ethereum Tokens (ERC-20s), resembling OMG, ZRX, and the like, and so must dissect this additional. But it surely’s possible that, as EOS sees extra tokens born on its blockchain, it must also see a bump in quantity. In my view, the US greenback and bitcoin paired quantity is a very powerful metric to think about, and Ethereum nonetheless has a slight edge over EOS on this regard.
Granted, most massive merchants commerce over-the-counter (OTC) by a chief dealer or different institutional degree service supplier, like Cumberland Mining, however these service suppliers possible nonetheless should go to exchanges to fill their orders, so I take into account alternate liquidity a draw for banks.
One might say liquidity begets liquidity. What I imply by that is that liquidity is a necessity to deliver a big participant in to a commerce; within the strategy of which they carry their very own liquidity, thus inflicting a suggestions loop. Evaluating the 2, whereas liquidity in EOS is rising, Ethereum remains to be forward.
The Necessity of Hedging
One other want that giant establishments have is the necessity to hedge, notably in cryptos. As a result of many cryptos are held in a excessive safety setting, off alternate, a US greenback hedge is required to handle the place. Some folks assume the bitcoin futures market was created as a major means to spend money on bitcoin. Whereas circumstantial in my reasoning, I believe this isn’t the case. I believe it was created extra as a way for giant holders to hedge as wanted, and I can nearly assure that giant banks and hedge funds had a hand within the approval and design.
I’m certain there’s no mistake why the Ethereum futures market could begin at CBOE, and why the CME is working a reference fee. It’s merely that giant gamers have an interest within the product. Notice the futures launch just isn’t confirmed however has been reported by Enterprise Insider primarily based on discussions on CFTC sources.
Please don’t mistake what I’m saying. I’m not saying that as a result of establishments are coming into a commerce, that they’re bullish. Nonetheless, I do consider that establishments coming into a commerce precludes that market’s demise. As soon as massive gamers are enthusiastic about an asset, that liquidity they carry is a lifeline, no less than to maintain it buying and selling.
In case you are acquainted with my work, you realize I construction all of my buying and selling, each lengthy and quick time period, utilizing the Elliott Wave concept. It was by the usage of this methodology that I made a name in early 2017 that Ethereum would see 4 digits, however I didn’t anticipate it to be so quick. Actually not all my calls come true, however I watch a myriad of patterns and worth ranges constructed into the unique forecast.
It’s by this methodology that I’ve come to consider that EOS will see $600 and above, most likely in a number of years, however don’t quote me on that as I’m much less assured on the timing. Additionally, by this methodology, I additionally anticipate Ethereum to have a lot additional to go so long as it doesn’t violate $122 with no sturdy response.
So as to evaluate the 2 in Elliott Wave, we’ve to disregard the US greenback worth and ‘depend’ a pair chart, particularly the EOS/ETH pair. From this chart, we are able to see that EOS outperformed Ether in late 2017. Extra particularly, we’ve the signature 5 wave patterns we often search for, and so we are able to anticipate EOS to proceed to outperform.
If our two waves maintain, as proven, at .0082, I get .56 because the eventual forecast. Notice that this doesn’t relate to the greenback worth. I assume they’ll each be increased in US at the moment, however that will not be the case.
The rally I anticipate to start out quickly ought to deliver this pair to .07 EOS to Ether from the present .02. In different phrases, EOS will severely outperform Ether within the quick to medium time period.
So as to wrap up this text and to return to our starting query, my conclusion is that EOS won’t kill Ethereum. Nonetheless, until Vitalik and staff can improve the scalability points with Ethereum, EOS will take some share of recent initiatives from Ethereum. I don’t know whether or not this shall be as a consequence of challenge attrition or from extra new initiatives beginning on EOS than Ethereum. That stated, that is an assertion that’s restricted to my very own expertise with each merchandise, which I hope I made clear within the first installment. Given the liquidity distinction I anticipate Ethereum to proceed to attract institutional cash.
I’m at present way more assured on my worth projections, no less than till one thing new exhibits up within the worth construction. Nonetheless, up to now, each the EOS and Ether charts are bullish in US and must be for a while, albeit with the same old deep corrections which might be the norm in all cryptocurrencies. That is my wheelhouse, and so I’m placing barely extra of my investing into EOS for the time being.
Disclosure: I’m/we’re lengthy EOS-USD, ETH-USD.
I wrote this text myself, and it expresses my very own opinions. I’m not receiving compensation for it. I’ve no enterprise relationship with any firm whose inventory is talked about on this article.