The Sunday Chart – ETH Price v New Daily Wallets

Here are this week’s charts (both of which display the same relationship – ETH price vs new wallets):

Temporal: https://imgur.com/GbWQXYR

Sequential: https://imgur.com/ibMLG0W

Note: the sequential version has no time axis – the daily new wallet numbers since January 2017 are plotted in ascending order (in orange), along with the corresponding price data for that day (in blue, above or below). In this chart time zig-zags back and forth depending on whether the market was rising or falling. What this chart shows is the price banding that occurs as the market rises and falls.

The ETH roller coaster is on a tear, now climbing steeply after a lengthy down spell. The price has more than doubled in a month. We’re up about 800% from a year ago (which was an ATH at the time!), so I hope there won’t be any carping about performance… Transactions are suddenly well up – back to a million a day; addresses are also up (but not by quite as much as we might expect – more on this in a moment); and barring black swans and other calamities – a couple of which I touched on last week – it seems another big run-up is on the cards. The mood in the marketplace is as buoyant as I’ve ever known it. ETH is also gaining on BTC at a rate of knots. It might even be the beginning of the much-hoped-for decoupling between the prices of BTC and ETH.

Addresses: there has been a spike in the last few days of sending addresses – to an all time high in fact – which corresponds to the rise in transactions, but the new daily address count remains oddly subdued. This means that the hefty price rise we’ve seen recently is because fewer new addresses are being funded with more money per address than we’ve seen in the past. In other words, there are some heavy hitters in the market (I would be very grateful if anyone can point me to some specific funding data). This certainly squares with the news. At least two major banks have put out press releases saying that they are opening trading desks, and it seems some of the larger hedge funds and family offices are beginning to take positions in crypto too. If this really is the season of professional money getting into ETH, then we should be prepared for further substantial gains. It may be that the relationship between price and new wallets will shift for some time as fewer wallets do more of the heavy lifting. This will show up on the chart as the gap between the price line and the wallet line widening, but not because of network effects (which would amplify that difference still further). Having said that, with a price rise of 100% per month, I expect we’ll see a flood of new entrants coming in again, maybe even some of those who were burned earlier this year. All we need now is an announcement from the SEC that ETH is not going to be classified as a security (even if many other alts will be classified as such), and the future will be very rosy indeed.

But, as ever, let’s be careful out there. Don’t get carried away – acting out of hope and exuberance and FOMO on days like these is just as bad as panic selling when the market is tanking.

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