Glassnode Co-Founders: Ethereum Could Go To $7,500 — How Possible Is It?
Glassnode co-founders express their views on Ethereum target, but does their analysis hold?
Key Takeaways
- Ethereum is predicted to skyrocket by 120%.
- Speculation over a spot ETF launch boosted sentiment.
- Analysis faces irregularities in technical assumptions.
The co-founders of the blockchain analytics platform Glassnode, Jan Happel and Yann Allemann, predict that Ethereum (ETH) could skyrocket by 120% from its current level.
Using the pseudonym Negentropic on the social media platform X , they suggest that Ethereum could reach a new all-time high of approximately $7,500.
This isn’t an overly optimistic target, but the basis of this projection might be shaky.
Ethereum Making A Fractal?
They base this projection on historical patterns, specifically noting a similar setup in early 2021. According to their analysis, the current market structure aligns with the 161.8% Fibonacci extension seen during that previous rally.
Happel and Allemann also highlight Ethereum‘s relative strength compared to other cryptocurrencies. They believe that speculation around the imminent launch of a spot exchange-traded fund (ETF) in the U.S. could be a significant catalyst for this surge. At the time of their prediction, Ethereum was trading at $3,400, down 1% over the past week.
Negentropic Chart Deconstruction
Even though the analysis comes from reputable analysts behind one of the biggest on-chain data providers, there are some irregularities related to the rules of the technical analysis.
The first major problem with this projection is how they have labeled the cycle five-wave impulse. They have labeled the previous bull cycle highs as waves 1 and 3, with its last bear market being wave 4. That cannot be the case since the rules of the Elliott Wave Theory state that wave 4 cannot enter the territory of wave 1.
Ethereum’s price fell to $1,000 in June 2020, below its previous bull market high of $1,525, invalidating this count. However, this isn’t the most important irregularity in projecting the target.
Assuming ETH price is at the same point as in its previous bull cycle – a lower degree wave 3, a $7,500 target for its wave 5 is projected as a 1.168 Fibonacci extension level. Although this could happen, it is based on two major assumptions that don’t hold much ground. The first is that wave 5 will be the largest and get extended, and the second is that ETH is in the same context with one more advancement to its next cycle peak. Additionally, the projection assumes ETH ended its wave 4 correction of a lower degree on May 1 at $2,780. However, the biggest problem with this 1.618 Fib target is what appears to be a missusage of the Fibonacci extension tool.
We cannot see how the Fib extension was drawn on the original chart, so we attempted to adjust the 1.168 level to reach the target, keeping the assumption of wave 4 ending on May 1. Only if it is anchored at the beginning of the current bull cycle in November 2022 does the 1.618 Fibonacci extension level come to 1.618. If it is anchored at the beginning of wave 3—as it should be to the project of wave 5—the 1.618 level comes closer to $7,000.
The problem is that the Fibonacci extension tool measured the previous wave and its subsequent correction to project the target for its next one. Here, the Fibonacci tool was placed at the beginning of the uptrend while its second point was placed at the second correction, encompassing four waves to project the fifth.
So, is ETH ending wave 4 of a lower degree and in a fractal to February – March 2021?
Further, comparing the previous bull cycle and the current one shows that the cycle is skewed, according to the Jan Happel and Yann Allemann chart. What they labeled as a similar bull flag came before the start of its last bull cycle in 2020, while the new bull flag came as a wave 2 correction after the current bull cycle started.
Even though this isn’t the breaking factor that could invalidate the fractal, it is a major point when comparing the market context. Furthermore, its symmetrical triangle from February to March 2021 lasted 40 days, and ETH‘s price fell by 40% at its maximum. On the other hand, at its current symmetrical triangle, ETH fell by 30%, and the triangle is still lasting for 106 days, with more to come before a breakout.
The Verdict
It appears that the upper ascending resistance interaction is the main reason this $7,500 target is here, and all other analytical layers serve to substantiate it. Even though the ETH price reaching this level is not out of the question and would mark an increase of 120%, the reasons behind this price target need to be substantiated more, with clear violations of technical analysis tool usage and misplacement.
If the assumption of ETH being in the same price context is true and continues moving to the 1.618 Fib extension level properly applied, it would come to $6.940 on its wave 5. In conclusion, to project the target and properly apply the prediction tools, we first need to see how the current structure ends and where it low be, since the Negentropic chart assumes it already ended on May 1.
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