On Monday the 12th of June, immediately after the end of the Bancor ICO which raised ether worth roughly $153 million, this wave of excitement finally reached an end. Since, unfortunately, Bancor can neither use ether to pay any kind of employees nor use them to rent premises or something like that which leaves them no other choice than selling at least some parts of their ether holdings in order to ensure that they will be able to cover their expenses. The drop briefly broke the excitement and caused more people to sell their holdings, yet, the price mostly recovered after the news leaked out that the ICO raised about $153 million in just a few hours, recreating the believe that there is still more upside potential. Though, what the actual "smart money" realised at this point or already had realised before was that due to the increasing amount of money flowing into ICO's (e.g. EOS), even bigger amounts of ether will be sold at one time and, thus, after a certain amount of time, entirely breaking the current excitement and causing the bubble to finally burst. Additionally, almost simultaneously, there appeared some fake news about Ethereum's co-founders Vitalik Buterin, having died in a car accident, making prices drop even more.
On Sunday the 17th of July, just after the price hitted its low at $137, it seemed for many investors low enough to get back in the game and buy some ether. Also, now that the bubble seems to be gone, investors are again considering ether as an investment with "guaranteed returns". However, all the news which created this abnormal excitement around the blockchain blockchain have been leaked now, meaning that there is nothing to get excited about anymore which is why we are still in a bear market with ethereum and other cryptocurrencies.
As the chart above shows, there is a significant correlation between the current ether price chart and the bitcoin bubble in 2013/2014 which is only logical since the situations in both cases are quite similar:
1. A huge wave of news, causing more and more people to get excited.
2. Excitement breaks (no "new" news, "smart money getting out", ...)
3. Price is now low enough for investor to get back in.
4. No new excitement is created: slow depreciation in value.
Since the price is likely to keep rising for the next couple of days, I suggest now to buy some ether and to set your take profit at the at $316.
Once the price noticeably breaks the resistance level at $249, its further behaviour is probably going to conform to the prediction, marking its high during the next two weeks close to $316 and then slowly declining, down to approximately $120. I recommend to start selling your positions bit by bit as the value of one ether moves above $290.
Also, there is forming a head & shoulders pattern supporting the idea of a price turn.
Trading: Set a sell-order at 272, charged with 15% of your initial position size and another order at 275 with the remaining 5%.
I completely agree with you and the fact that Bitcoin and Ether are both having completely different purposes. However, many investors do not really differ between different cryptocurrencies. A suitable example to back this is the recent significant appreciation in value of Ethereum Classic’s cryptocurrency even though this blockchain cannot stand a chance against Ethereum. What I think is similar, is the current market sentiment and the one during the Bitcoin bubble in 2013/2014.
But to my mind, you forgot something essential. First, there is no "silkroad" on Ethereum, and the purpose of the network is not to "hide" money or to trade in the darknet... Which makes a huge difference between bitcoin 2013 crash and what Ethereum is currently experiencing.
And a crucial point is to keep in mind that Ethereum network is full of news and exitation at this moment. There are a lot of ICO, and huge companies and banks made up via the Ethereum Community.
I don't think this gonna happend the same way it happened for bitcoin...
Let's see what happens on the August 1st.
Basically, ICO's are not new to investors anymore, however, there are many investors who do not even really know what an ICO or a token is... Since they are just getting excited about what sounds exciting to them, from their point of view, new ICO's would not be any different from old ICO's and Financial institutions contributing to blockchain projects would not be new either.
(Example: comp. blockchain projects cashing in raised ether - mining pools.)
This comment was posted on Reddit by the end of 2014, reflecting events and sentiment in the Bitcoin market back during the bubble.
As you refer to “silk road”, I suppose you are talking about the bubble which occurred in April 2013, whereas my analysis is based on the following bubble, starting in November 2013.
Nevertheless, the eventual split of the Bitcoin blockchain will probably have a major influence on the ether price, therefore, thank you for reminding me!
As far as I am informed, however, a split of the Bitcoin blockchain seems rather unlikely to me since the vast majority of the miners know that a split would come along with significant losses for all parties, thus, they will definitely try to prevent it from happening.
(Please correct me if I am overlooking something here.)