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Part 1/4:
Ethereum's Dubious Speculation: A Closer Look
The Valuation of Ethereum vs. Bitcoin
When it comes to the valuation of Ethereum, the ETH/BTC ratio is the only one that truly matters. The USD valuation is largely irrelevant once you value your portfolio in Satoshis.
The presenter's views on the ETH/BTC ratio have been very accurate over the past few years, but his views on ETH/USD have not. He has always contended that ETH/USD would go up if Bitcoin went up, but he also called for Ethereum to "go home," which never happened.
If you value your portfolio in Satoshis, it doesn't matter if your USD predictions don't come true. By staying Bitcoin-heavy, the presenter was able to completely outperform Ethereum, as all the upside that Ethereum had, Bitcoin had and more since the Merge occurred.
The Bullish Case for ETH/BTC
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Part 2/4:
The presenter believes that ETH/BTC is getting very close to a bottom, and his base case is for it to bottom within the next two months, potentially by the end of 2024 or mid-January 2025 at the latest.
This view is based on a pattern he has observed over the past two cycles, where Ethereum sets a high early in the bull market, followed by a lower high, and then a low is set. This low becomes important later in the cycle.
The presenter believes that if Bitcoin continues to follow its cyclical view, it could lift Ethereum up with it, potentially taking it as high as the prior all-time highs. However, he acknowledges that his views on ETH/USD have been wrong and that he has started to hedge his position by holding some Ethereum.
The Potential Downside for Ethereum
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Part 3/4:
The presenter considers a worst-case scenario for ETH/BTC to be around 0.03, as this would represent a return to the start of the "bubble" formation. However, he doesn't think it has to go that low, and he's started to hedge his position as ETH/BTC has reached his target range of 0.3 to 0.4.
One factor that could contribute to further downside for Ethereum is the ongoing quantitative tightening (QT) by the Federal Reserve. The presenter notes that last cycle, Ethereum bottomed around the second rate cut, corresponding to about 50 basis points of rate cuts. This cycle, we've had 75 basis points of rate cuts, but Ethereum continues to put in new lows, suggesting the neutral rate may still be below the current Fed funds rate.
Conclusion
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Part 4/4:
The presenter has been more accurate in his predictions about the ETH/BTC ratio than the ETH/USD pair. As Ethereum approaches his target range, he has started to hedge his position, recognizing that his views on ETH/USD may have been wrong. However, he still believes that Ethereum could see upside if Bitcoin continues to follow its cyclical patterns, but he's also prepared for the possibility of further downside in the short term.