Ethereum Rektoning

18 mag 2022

Ethereum is narrative driven. The ICO bubble pumped it up in 2017, it rose massively on the back of the ICO bubble.

Then when people realized ICOs were illegal securities, and everyone started to realize that ETH is not money the way Bitcoin is money, they sold continually, down 95%.

In 2020 when the DeFi bubble ignited because of the crypto whales putting honey pot liquidity into yield farm schemes, it reinvigorated the Ethereum narrative. It rose modestly on the back of DeFi, but most of the gains went to the DeFi coins.

In 2021 after Bitcoin entered a real bull market, that gave the signal to all of the whales & VCs to deploy into Ethereum DeFi. The Ethereum trade became the utility DeFi trade, and then it actually had a double bubble with the NFT narrative boosting it as well, which saved the ETH bull run because DeFi had already popped. Most DeFi coins were down 90% by the time the NFT narrative picked up.

In 2022 we entered a bubble pop situation for most of the defi ponzi schemes like Ohm which were driving big retail volume to ethereum DeFi, but the NFT bubble kept going longer than most of us imagined it would.

From Jan 2022 it became clear the macro environment was not going to sustain the crypto bubble anymore, and after the Terra LUNA ponzi scheme blew up, it represents contagion to the rest of the DeFi yield schemes.

Ethereum value narratives of "DeFi" and "NFT" utility will slowly die off this bear market just like they did last bear market.

I'm sure ETH will get a pump when it does the POS merge but that will be a sell the news event.

I expect ETH to be $500 as people realize:

1) There's better smart contract chains that are not broken like Ethereum (ETH gas is too expensive, too centralized and MEV is a real problem...if DeFi continues anywhere it should happen on other chains that are faster/cheaper/MEV protected)
2) ETH the asset is not ultrasound money, but it's the same 2 digit shitcoin in 2022/2023 as it was in 2017 & 2019. ETH does not have the sound money properties of Bitcoin.

19 nov 2022

Nota

So far this idea is playing out perfectly. Just as predicted, the price sharply cratered as contagion from the blowup of LUNA & 3AC spilled over to Celsius.

(which I predicted on my twitter)

Celsius held a massive stETH position, which is *still* overhang for the ETH bulls who went long the ETH merge using stETH as collateral on Aave (and probably to OTC lenders).

As predicted, the Ethereum Merge was used to pump ETH in the summer, and it was a massive sell the news event, reaching my price targets nearly perfectly.

"who could have seen this coming."

the stETH:ETH liquidity shrank into the activation of PoS on Ethereum, and then it filled back up temporarily.

There were rumors that FTX has purchased Celsius's massive 445,000 stETH position OTC ... but the contagion finally reached one of the biggest players in the Ethereum/Crypto ecosystem: FTX

As FTX went under, the curve pool started getting drained of ETH again, and it came out that Celsius is still holding their stETH.

This is massive sell pressure in the Ethereum defi system that will probably cause ETH bulls who borrowed against their stETH in DeFi like Aave to eventually get liquidated as stETH depegs to 0.5.

Expecting the next 6 months to be absolutely brutal for ETH as the market finally digests how big of a pump & dump 2021 was ... and how illiquid the ETH bulls are now that many of them lost their money in FTX & have no timeline to be able to unstake their ETH as the ethereum developers decided not to prioritize allowing people out of the staking scheme ... something ponziesque.

Bitcoin has been the same thing since it was launched over a decade ago - BTC is money.

BTC doesn't need to market new narratives every cycle to pump the coin price like Alts do.

As more people understand what Bitcoin is, the price goes higher.

ETH always needs a new story.

This crypto crash is going to create a million new bitcoin maximalists.

thereum was never scalable, it can't compete with Bitcoin.

The best it can do is compete with other semi-centralized smart contract chains.

Ethereum is a "minimum effective decentralization" chain but it's still too centralized to compete with Bitcoin.

As HNWs and institutional investors who came into ETH in 2021-2022 based off the FOMO of the centralized introduction of artificial scarcity with EIP1559 based off the failed stock 2 flow thesis meme realize they were the mark, ETH will continue its march to $500.

It's fitting that Vitalik sacrificed Ethereum's long term credible scarcity because he was trying to compete with the stock 2 flow meme, to suck institutional investors into looking at ETH over BTC as "ultrasound money."

The fact that they can change the monetary properties invalidates the thesis that ETH is sound money, it's more like digital aluminum.

Ethereum ponzinomics plus separation from Bitcoin even further after activation of the proof of stake chain leads to more centralization.

Precedent has been & is being set that regulators can force changes to ethereum such as metamask/infura censoring tornado cash, but this time at the protocol level.

I'm not sure we'll see this or not, because defi companies are already just complying with OFAC rules, and based on mevwatch.info, the significant majority of ETH blocks are already OFAC compliant and more than 30% of blocks are produced by US regulated exchanges, and LIDO controls the majority of staked ETH.

Bolting on premined tokens is an unnecessary barrier for user adoption of peer to peer technology like "defi."

As the bear market continues, more p2p web / web5 / decentralized technologies will be released by Bitcoiners WITHOUT the token grift.

Bitcoiners are invalidating the thesis for owning DeFi coins, and Bitcoin continuing to stay decentralized and censorship-resistant is invalidating the thesis for thinking of ETH as a form of sound money.

That's why I still think we will see ETH heading to $500 in 2023 into 2024, and I'm being conservative.

15 apr 2023

Trade attivo

Fundamentally, everything I expected to happen has been happening.

The Silicon Valley banks that were propping up crypto have all gone under. Signature Bank, Silvergate Bank & Silicon Valley Bank.

The regulators have turned on crypto and the fraudulent markets of DeFi.

The Treasury has put out a notice warning that DeFi needs to come into compliance with AML/KYC anti-terrorist financing regulations and everyone will need to comply with that.

Liquidity is drying up from a lot of the people who were propping up ETH & Crypto markets.

SEC has gone after the US exchanges for offering staking yield products.

The Shanghai upgrade just happened and the price of ETH pumped up to the resistance line in my chart, so I'm entering a short here.

Now that the central planners at Ethereum activated the exit door for getting out of the staking scheme, 500,000 ETH entered the exit queue which will take 2 months+ to withdraw based on their arbitrary rules (to prevent price dumping.)

The price rose because exchange like kraken & coinbase bought Ethereum to give their users so they can have liquidity while they wait to get the ETH out.

Many in crypto are complaining about "operation chokepoint" which is designed to choke off liquidity from the ponzi schemes and unregulated pump & dumps happening in crypto.

Binance is under investigation, along with the company that manages their stablecoin. It's alleged that there was a lot of fraudulent activity happening in that stablecoin.

Circle is under investigation by the SEC.

The only reason Ethereum and most of crypto has not capitulated yet was because SVB got bailed out. There were tens of billions of dollars kept in SVB related to crypto projects, including USDC's backing and many of the VC firms that prop up crypto ponzis.

Ethereum & Crypto got a bailout, along with the rest of shill-a-coin valley.

We've seen the exodus of investment dollars from crypto projects to AI projects, along with a mass migration from "web3", NFT & DeFi projects to AI projects.

All of this makes me confident that now is a perfect time to short ETH, if you follow the trend - the macro picture is not great for risk assets, and there has been zero capitulation in crypto/web3/NFTs.

We are following the last cycle almost perfectly, which saw Bitcoin enter accumulation mode and rise massively and end the year up 300%. In 2019 when this happened, Crypto still followed bitcoin for some of the year, but mostly you saw bleeding against Bitcoin, liquidity drying up and at the end of the year the final capitulative move happened in crypto.

I'm expecting the same thing later this year, predicted back in January in this tweet along with a chart comparing the 2 cycles.

twitter.com/bradmillscan/status/1612468547149504512

I'm expecting ETH to hit resistance around this point of 0.07 BTC / 2100, and continue it's decline downward as the reality of the extremely poor fundamental of "crypto" get absorbed by the market and real capitulation happens towards Q4 2023 - Q2 2024.