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Blocksmith Says: ETH Will Underperform Next Year

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I thought today we could consider Ethereum vs Bitcoin on an intermediate term price horizon. XETXBT basis weekly data here is highly suggestive of a meaningful downswing (in other words Ethereum underperforms across next year). Let’s unpack the cycles first – 54 month, 18 month and 40 week.

There are two 40 week cycles to one 18 month cycle in Hurst cycles nominal model and three 18 month cycles in the overarching 54 month cycle (the so called Business Cycle). The 54M started up in September 2019 and is due to trough in November 2023.

Without drawing on complicated cycles analysis tools, but rather simply using a standard MACD, it seems clear that the 54M peaked late 2021 – in which case the price trajectory is down and this we might call the secular tailwind. In other words, any shorter cycle that rallies is fighting against this flow.  And this implies early peaks, struggling advances, and more intense down-sweeps going forward.

The last 18M cycle bottomed in mid-2022 and is more or less midway along and struggling – it’s not finding new highs or breaking the top of the range and MACD is muddled – that’s not the picture for a robust long cycle still advancing. Thus, we can say that the 18M cycle is carrying a burden and ease of movement higher is impeded.

I believe that the shortest cycle here, the 40 week, has peaked already and its not unreasonable to assume that tactically the spread will revisit the bottom of the top range circa 0.052. A perky range break higher will force a rethink, but this is not the preferred view.