Ethereum funeral watch, CPI stops increasing
An update on the ETH/BTC cross and implications. CPI finally stops increasing month-over-month as energy prices plummet.
Dear readers,
Our narrative about slowing inflation, falling rates, and risk markets bottoming continues to be confirmed this morning after CPI saw a monthly increase of 0.0% and core inflation yearly increases have declined for four consecutive months. It’s also the perfect opportunity to give readers an update on the ETH funeral watch initiated in May at The Bitcoin Layer.
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Price study
“Don’t tell me what you think; show me your portfolio.” Even though this publication doesn’t offer investment advice, the name should suggest the range of cryptocurrencies covered by our research. Yes, we write a bitcoin-only newsletter, but we also cover broader markets, especially interest rates. Our portfolio, if we were to be explicit, would be a balance between bitcoin and US Treasuries, rotating between the two dependent on both the economic and monetary policy cycles. It would not include Ethereum or any other altcoin. It also would not include equities. That is not to say we suggest our allocation to readers, rather it is how we cover global markets.
Part of the global macro landscape now includes the offshoot of digital assets in a post-bitcoin world. And we believe the ETH price relative to BTC (ETH/BTC) to be behaviorally significant within said landscape. In summary, if ETH/BTC is able to rise above the highs of the highs of last year, this tells me that Ethereum’s future will continue to attract market value. On the contrary, if ETH/BTC keeps making lower lows, it could be on its way to the graveyard with hundreds of other cryptocurrencies.
When I put ETH on funeral watch in May of this year, many readers were incredulous because my analysis didn’t include fundamentals, only price. But sometimes, all you need is price. I could spend time researching the potential impact of Ethereum’s switch to proof-of-stake, or I could simply watch the price reaction in the weeks and months following the switch. I’ll always choose the latter because I believe in not the wisdom of the crowd, but the wisdom of the market clearing price.
Speaking of price, let’s take a look at ETH versus BTC. My last post captured the price of this pair at 0.061. It fell significantly below the “danger zone” of 0.055, and has bounced nicely to above 0.075 as of this morning:
Here’s my update on ETH’s funeral watch: