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VC Investor: Bitcoin (BTC) and Ethereum (ETH) are oversold

It is no secret that 2018 has been a difficult year for cryptocurrencies. Bitcoin (BTC) has lost more than 80 per cent of its 2017 maximum value. Most currencies lost 90 per cent or more in value. Despite the poor performance of the market, a venture capitalist has explained why Bitcoin (BTC) and Ethereum (ETH) are experiencing oversold conditions from a fundamental perspective.

The last weeks have been particularly volatile, cryptocurrencies have reached new lows in 2018. Last Friday, the price of Bitcoin (BTC) was reduced to $ 3,300 and the price of Ethereum (ETH) to $ 83. The lowest prices are Cryptocurrencies have registered in 2018. The recent performance of the market has been particularly disappointing for investors. Many of them expected a winter rally similar to the end of 2017. Instead, they reached new lows and there are fundamental signs that show a general decline.

Bitcoin (BTC) and Ethereum (ETH) basically overbook

Although the recent declines have paralyzed the general confidence of the market, there are experts who give a positive face to the figures. Chris Burniske, a partner at venture capital firm Placeholder based in New York, gave a more optimistic outlook on current problems. In a post for Medium, titled “Bitcoin & Ethereum”, he expresses his optimism.

First, Burniske defined his position. He told readers that for him the fundamentals of cryptocurrencies are defined by the health of their supply and demand. In his words, the suppliers are the people who provide the network service (currently, the most common form of supply providers is a miner). The providers of the demand are those who use the service.

In addition, Burniske states that the value of the network is the term he will use to represent the total value. This results from multiplying the unit price by the number of pending units. The comparison of the activity of the network with the price of Bitcoin (BTC) and Ethereum (ETH) shows an interesting trend. You can see, according to Burniske, how the values of the network have fallen significantly more than the daily number of transactions.

Bitcoin (BTC) is processing, according to Burniske, 250,000 transactions per day. On the other hand, Ethereum (ETH) registers 500,000. The expert states that there is a significant deviation between the ratio of the aforementioned data and the value of cryptocurrencies.

These data clearly show that, from a fundamental perspective, both Bitcoin (BTC) and Ethereum (ETH) are oversold. Add to this argument by noting the “native demand metric” of each network. That is the secure transfer of value in Bitcoin (BTC), and the intelligent processing of contracts in Ethereum (ETH).

If you break down the decrease in the native value metric for these two cryptocurrencies, you can conclude a revealing fact. In addition, if it is compared with its price decreases, it becomes even clearer that they are fundamentally oversold.

If you look at these figures, you can see that the bear market has not affected all of the crypto-operations. Its use has not suffered a depression so important as to justify a sharp decline in its prices.


The price of Bitcoin (BTC) at the time of publication is $ 3,385. It has registered a daily fall of 2.4%. Its capitalization in the market is 59 trillion dollars. On the other hand, the Ethereum (ETH) is quoted at 87 dollars. It has had a fall of 2.7% and its capitalization is 9 trillion dollars.


Photo by Andre Francois on Unsplash

Also published on Medium.

Published inCryptocurrencies

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