Ethereum Is Set Up To Outrun Bitcoin (ETH-USD) – Seeking Alpha

Oleksandr Shatyrov
Produced by Ryan Wilday with Avi Gilburt and Jason Appel
With this article, I wanted to follow Jason’s article, ‘Where’s Bitcoin Going in the Second Half of 2023?’. However, I will discuss where Ethereum (ETH-USD) is going in the coming months. Jason discussed how the Bitcoin (BTC-USD) market has ignored a plethora of bad news, yet has marched steadily upward. At its peak in July, it reached just over a 100% return from its November 2022 low. How many assets and indices can claim the same? Ether is in a similar state to Bitcoin, but a couple of indications suggest it can outperform Bitcoin with respect to return during the rest of 2023.
In the background, the altcoin market is quite weak. Even our “favored” altcoins project lower before they are likely to reverse. Ether is often considered a bellwether for the altcoin market. But Ether is unique among altcoins, in that it has followed Bitcoin to new all-time highs with each major cycle. Of all altcoins, 99.99% have not been able to make new all-time highs in their second major cycle. Ether’s correlation to Bitcoin is quite high, whereas other altcoins only correlate to Bitcoin during the later stages of each cycle. Ether should be considered unique among altcoins as an investible asset. Most altcoins are just trades, in our experience.
Lastly, before I get to the crux of this article, I remind you that we are traders at heart. We give levels in our articles that show where our view changes. These levels should not be confused for statements that something can go up or down. That is true, an asset can go either up or down in price, but our levels more tactically important.
We recognize that no trader can win 100% of their trades. We use our levels to define the risk-to-reward of our trades. If the levels discussed are breached, our view changes, and likely our position.
The year 2022 was brutal for crypto. As Bitcoin fell from $65K in November 2021, it ushered in a year-long downtrend that dropped 77% from Bitcoin’s value into its low of $15,500 in November 2022. Ether had a similarly difficult year, dropping nearly 82%. However, Ether halted its drop in June 2022. While Bitcoin was putting in a lower low in November 2022, Ether held a low that was 22% higher than its June low. This was an early hint that the entire crypto market would start to turn higher. However, more importantly, this divergence was an indication that Ether was ready to outperform Bitcoin.

Bitcoin vs. Ethereum Daily (Motivewave Software)
The second indication that Ether should continue to outperform Bitcoin is the ETH/BTC pair chart. This chart, similar to a Forex pair can be used as the price of Ether in Bitcoin basis, or the price or Ether price in the US dollar, divided by Bitcoin’s price in dollars.
Since Ether’s high low in November 2022, this pair has been in a downtrend. That is to say, Bitcoin caught up to Ether since the November low. However, zoomed out, I have this pair coming into a very important support at 0.055 with the multi-year target in the 0.10 region.
As ETH/BTC is much closer to this support level than the ultimate target, the risk-to-reward favors Ether in swing trade. While I personally favor Bitcoin as a long-term investment which I hold in cold wallets, my swing trading accounts slightly favor the accumulation of Ether.
Zoomed out on both charts, my target for Bitcoin in the current cycle is $125K, as long as Bitcoin trades over $18K. My target for Ether is nominally $10.5K for Ethereum. That isn’t a perfect 0.10 relationship, but it takes only a small variation for there to be such a relationship.

ETHBTC 1D chart (Motivewave Software)
Jason focused on the next few months in Bitcoin while I zoomed you out to the big picture for Ether, as outperformance is most likely to be evident over many months. Now I want to zoom us in, as Ether has a very similar setup to Bitcoin. That is natural, as the two often show such setups in tandem.
Off of its very important November low, Ether has formed a potential five wave structure. This structure can be interpreted as wave 1 of a C wave, or the first of a third in impulse. Ether is a solid long setup. The difference between the two is that the former reflects the potential that the move off the 2018 low has been a diagonal, not an impulse. The reality is the 5 year bull market shows characteristics of both. So I am tracking both potentials.
Regardless of how one sees structure in the macro sense, five waves off the November gives us support at $1250, the .764 retrace of said five waves. In micro, the large drop on August 17th is viewed as wave-iii of © of circle-ii. Resistance for wave-iv is $1700. A sustained move over that level would be the first indication the bottom may be in. But as long as $1700 holds, I expect a final drop to $1470.
The target for this setup is dependent on where the final bottom lies. But based on a bottom at $1470, this setup can take Ether to between $4700 and $5600 before a larger pullback.

Ethereum, 6H chart (Motivewave Software)
Tactically speaking, I am slowly scaling into this drop. I will avoid taking aggressive positions until a reversal is evident. Provided an impulsive reversal shows, a swing trade in Ether will be the backbone of my crypto trades in the latter months of 2023.
Note that if Ether sustains under $1250 the next support levels below are $675 and $300. So that would preclude holding aggressive long positions.
In this article, I have discussed how Ether should be a higher performer. This applies in the immediate swing setup, forming with support at $1250 and a target of $4600+. Ether should also outperform Bitcoin into the latter days of 2023. It started to run ahead of Bitcoin in November 2022. The ETH/BTC is due for an important reversal, which should propel Ether’s performance above Bitcoin’s. Finally, my cyclical targets for Bitcoin and Ether suggest Ether is due for outperformance. As always, this can change at any time, but I have expressed what levels must be maintained for this to continue-and I discussed my personal tactics for capturing this potential.
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This article was written by
Ryan Wilday has over two decades of experience trading equities, futures and options. He was introduced to cryptocurrency in 2013 by a programmer friend and began mining and trading shortly thereafter. Though he read Prechter’s Elliott Wave Principle in the early 2000’s, he didn’t make practical use of the theory until joining EWT in 2015. He has used the theory to call many of the most important turns in Bitcoin and other cryptos since 2017. Of late, Ryan has developed many quantitative systems for trading crypto which he has deployed in this service to the benefit of subscribers. Ryan is a popular speaker at financial forums and conferences in the U.S., including The Traders Expo and The Money Show, and widely syndicated on sites including Seeking Alpha, MarketWatch, and Nasdaq.com. He is the author of two eBooks: “The Risks & Rewards of Cryptocurrencies” and “10 Rules To Be A Successful Crypto Trader.”
Analyst’s Disclosure: I/we have a beneficial long position in the shares of ETH-USD either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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