Roughly three months ago, investors cheered as Bitcoin prices broke above $3,000. It had just survived a hard fork (the one that created Bitcoin Cash), and markets were foaming at the mouth. It turns out we hadn’t seen anything yet, because…
…Bitcoin hit $7,191.00 today.
There is no mystery behind the epic rally. Everyone knows it happened because the CME Group Inc (NASDAQ: CME) decided to list Bitcoin futures alongside gold and crude oil.
That means you’ll see Bitcoin futures on all financial data streams…the top banner on The Wall Street Journal…Yahoo! Finance…Bloomberg…it will be everywhere.
This might not mean much to retail investors, but it is the green light for Wall Street to enter the cryptocurrency market. It means that Big Money is coming to a crypto exchange near you.
Some investors would probably prefer if this wasn’t the lead Ethereum news of the day, but that’s just how the cookie crumbles. ETH still lives in a Bitcoin world—that much became clear this week.
BTC dominance shows that 62% of cryptocurrency market capitalization belongs to Bitcoin. This compares with just 49% at the start of October, suggesting that investors are rotating money from altcoins to Bitcoin. It’s no wonder that the Ethereum to USD exchange rate dropped 2.5% to $291.34.
Daily Ethereum Chart
What can ETH investors do in this situation?
Here are two options:
1. Hop on Board, Then Jump Ship: Trade Bitcoin until its 10-day moving average falls below its 20-day moving average. At that point, shift back into altcoins like Ethereum, and wait for the gains to roll in.
2. Stay on Land: This isn’t the first time that Bitcoin raced ahead of the pack. Until March of this year, Bitcoin dominance was well above 80%, simply because investors weren’t familiar with the alternatives. Now it appears as if Bitcoin has credibility with Big Money that others don’t—but that too will change, in time.
I’m not wild about trading strategies in this sector, simply because the costs of being wrong are huge. But we firmly believe that ETH is not far behind Bitcoin in the regulatory lineup, so we maintain our $1,000 Ethereum price forecast for 2018.