Like all signals in technical trading, you can never be sure it will pay off. However if you get a consistent run of a signal flaging a future move, you have to take it very seriously indeed especially if it could make a lose you a lot of money.
Way back in time I wrote an article here predicting Ethereum was going to explode upwards in price. This was because the transaction fees were rising vertically and that meant Ethereum was getting heavy use. Use equals value in Crypto. For all the naysayers Crypto has many great use cases and use drives and sustains value for coins and tokens.
It turned out I was spot on because as Ethereum came roaring back from the last Crypto winter, transaction costs front ran the increase in price.
So if rising transaction costs make the price go up, what does falling transaction costs do? It’s a leap to say falling transaction costs predict a price fall, but you can be forgiven for seeing this as an obvious extrapolation to rising costs predicting a price rise.
So I also wrote an call here using the observation that transaction fees have fallen and low and behold down came Ethereum.
I am not a fan of the platitude that correlation is not causation. I’d modify that saying to ‘correlation is not causation but don’t bet your life on it.’
So here is the chart and it is for me ‘make or break time’ for the bottom or next leg down. I think we are going much lower, but I let the market tell me and the current trend says we are at a tipping point.
Here is the chart:
I can see a bottom here, because of the perfect fractal of an even two stage fall. However we have a sideways trend in place the is a prelude to a big move in either direction. If you like to trade that is a gift because once that trend is broken you jump on the move and ride it on up/down to the next repricing equilibrium.
So right now Ethereum transaction fees have dropped to levels so low I cant recall them being this cheap. This has seemed to have dramatically unfolded over the last week or so. This is an ituition that comes from transacting a fair bit but it is born out in charts like this one from bitinfocharts.com
Its a dramatic enough shift in costs downward to suggest to me that the next crypto leg is imminent.
If it comes that will be the bottom.