As of October 2023, the quote for eth to usd was $1,600, up 60% from the year’s low of $1,000, but still down 67% from the peak of $4,891 in November 2021. Whether to convert or not should be combined with the following quantitative analysis:
Technical indicator signal
Short-term trend: The daily RSI of ETH is 58 (neutral range), but the 4-hour MACD forms a bearish crossover below the zero axis, indicating the risk of a pullback. If it breaks below $1,550 (the 50-day moving average), it may fall to $1,400 (the 61.8% Fibonacci retracement level).
Derivatives market: Deribit data shows that there are 120,000 ETH (nominal value of 192 million US dollars) of open interest in put options with an exercise price of 1,500 US dollars. If the price drops below this level, it may trigger a liquidation of 240 million US dollars of long positions (Source: CoinGlass).
Macroeconomic pressure
The yield on the 10-year US Treasury note rose to 4.8% (the highest since 2007), putting pressure on the valuation of risky assets. Historical data shows that when the yield is above 4.5%, the median 30-day yield of ETH is -8% (data from 2018).
The probability of the Federal Reserve raising interest rates in November is 40% (CME FedWatch). If it does, the total market value of cryptocurrencies may shrink by 15%-20%, and ETH may fall to the range of $1,300- $1,400 (Morgan Stanley model).
On-chain data and holding behavior
Whale Movement: Addresses holding over 10,000 ETH have net transferred 180,000 ETH (approximately 288 million US dollars) to exchanges in the past 7 days, setting a new high for selling pressure in 2023 (Data source: Santiment).
Retail sentiment: The number of addresses holding 0.1 to 1 ETH increased by 2.3%, but such addresses only accounted for 7% of the total circulation, making it difficult to hedge against large-scale selling.
Regulation and event risk
The U.S. SEC’s ruling on the security nature of Ethereum is expected to be announced in Q1 2024. If ETH is recognized as a security, the risk of delisting on exchanges could lead to a price plunge of 30% to 50% (estimated by Bloomberg Intelligence).
However, if the BlackRock Ethereum Spot ETF is approved (with a 35% probability), it may bring a monthly net inflow of 1 billion US dollars and push the eth to usd to rebound to 2,000 US dollars (Gray-scale prediction).
Cost and Trading Strategy
Spot conversion: If the current price is sold at $1,600, assuming a handling fee of 0.2% (Coinbase), the actual amount received is $1,596.8. If one waits for the rebound to $1,750 (+9.4%) and sells, the net profit after deducting the handling fee is 7.3%.
Hedging plan: Hold ETH and purchase a $1,500 put option at the same time (with a premium of approximately $80 per option), which can lock in a maximum loss of 12.5% ((1,600-1,500-80) /1,600), while reserving upside potential.
Historical cycle reference
During the bear market in 2018, ETH dropped from $1,432 to $84, a decline of 94%. The bull market rebounded by 4,800% in 2021. The current market is at 0.35 (neutral range 0.2-0.8) of the “irrational exuberance” index (Cyclical Price Oscillator), with 63% of long-term holders (holding positions for more than one year), indicating that the majority of investors choose to wait.
Operation suggestions:
Short-term cashing out: If you need liquid funds or have a low risk tolerance, you can sell 50% of your holdings and set the stop-loss at $1,520 (the recent low point).
Long-term holding: If the target is above $2,500, you can retain your position and set a stop-loss at $1,400, waiting for the benefits of ETFs and interest rate cuts.
Hedging strategy: Purchase a 10% position of put options, with the premium controlled within 2% of the total position.
The current conversion decision needs to weigh the short-term fluctuation risk (-20% possibility) against the long-term growth potential (+100% possibility), and choose the strategy based on personal risk preference and capital demand.