What are your predictions about Electroneum

There aren't many projects that are still operating successfully after the 2017 ICO boom. Electroneum (ETN) is an example of the fact that the hype of that time was not just hot air.

Who doesn't remember the 2017 ICO boom? Especially nowadays, when the hype surrounding Decentralized Finance (DeFi) reminds us more or less of that time. In 2017, Initial Coin Offerings (ICOs) were all the rage. And Electroneum (ETN), the project of our choice for this week's analysis, also dates from this time.

In 2015, the current CEO Richard Ells was already enthusiastic about crypto and the underlying blockchain technology. He realized that blockchain could change the world for the better. So he put a team together and developed what would later become the Electroneum ecosystem. In 2017, the successful ICO took place with a total of 40 million USD.

What exactly is Electroneum?

Today we are September 26th, 2020. Electroneum (ETN) is a crypto company from Great Britain, with around 50 employees and more than 4 million users worldwide. The mission is still the same as in 2015: To provide a payment option for all those on earth who do not have access to banks.

Most recently, Electroneum launched the freelance market AnyTask.com, from which thousands of people are already benefiting. The platform allows freelancers to offer their services. Free of charge and with no hidden costs. The freelancers are then paid securely and almost in real time via ETN, Electroneum's crypto currency.

ETNDonate.com was also launched by Electroneum this year. This platform is intended to offer non-profit projects a free opportunity to present themselves. Including donation generation in ETN. In addition, ETN can be used to buy a steadily growing amount of everyday or not so everyday goods in the in-house app. ETN has established itself as a means of payment for daily use in many countries without “western financial structures”, particularly through the in-app option for direct charging of a prepaid mobile phone contract.

And what about the fundamentals and the network?

Now that we have a rough overview of what Electroneum wants to achieve and what it has already achieved, we can now turn to the charts. Although, maybe a few more fundamental data in advance.

Electroneum (ETN) is currently ranked 160th among the largest cryptocurrencies in the world, sorted by market capitalization. The market capitalization is just under USD 51.5 million. The maximum amount of ETN that will ever be in circulation is capped at 21 billion ETN. There are currently over 10 billion ETN in circulation. And how do new ETNs come about? By mining!

The network itself runs via the consensus mechanism Proof-of-Responsibility (PoR). This was introduced in 2019. Compared to Proof-of-Work (PoW), i.e. the consensus mechanism of Bitcoin (BTC), this is said to have resulted in a massive reduction in energy consumption. The inflation rate of ETN should never rise above 2% due to the emergence of new ETNs. A series of halvings has been introduced since July 2020, every 4 years, as is the case with Bitcoin (BTC).

Off to the daily chart

So, now to the charts and fast! In the daily chart we see the ETN / USDT currency pair at ~ 0.0050 USDT at the time of this article. ETN's price has followed an ascending support line since March 13, 2020. In May 2020, a falling resistance line was added after a high at USDT 0.0115. Several attempts to break out above this resistance line failed.

Source: Tradingview

The result was that the price of ETN was narrowed more and more between the two lines. The area marked in green shows how price movements continued to decrease, especially from September 12, 2020. On September 25th, the breakout took place above the falling resistance line.

Low volume and no higher high

Studying breakouts this young in a course that isn't exactly staggering amounts of daily trading volume is always difficult. In any case, the volume was not convincing when the ETN erupted. As we can see on the daily chart, there was only a slight expansion in volume at the breakout and the current daily candle currently leaves a lot to be desired.

Source: Tradingview

In addition, we can see a higher low due to the breakout, but not a higher high. Admittedly, that can still come. But usually an outbreak should be more explosive, shouldn't it? Well, the reason for the lack of explosiveness is on the one hand the volume and on the other hand a resistance, which is not so easy to see in the daily chart.

Searching for clues in the 4-hour chart

On the 4 hour chart, we see a resistance zone at USDT 0.00505. So very close to the price of ETN. This zone was tested 3 times before the outbreak, each time without sustained success. The more often supports and resistances are tested, the more fragile these zones become in the course. As we can see on closer inspection, the current 4-hour candle was able to start above the resistance line.

Source: Tradingview

In the shorter period of time, the volume looks much better. Both at the outbreak and at the last 4-hour candle. But we also see that there is still a lot to be done for a higher high. 0.00632 USDT has to be outbid. In addition, the next resistance zone to be approached is at 0.0065 USDT.

But how likely is that for the price of ETN?

To investigate the question in the subheading, let's stay with the 4-hour chart for now. So far we would see the price trend of ETN bullish in any case. Let's see what the Fibonacci retracements say about it. So we measure the entire bearish course from May 2020 to the most recent low in early September. Lo and behold, we get answers promptly.

Source: Tradingview

On September 12th, the price of ETN tried to break out of the falling resistance line. However, the price could not achieve the 78.60% Fibonacci level. This level is almost at the same level as a resistance zone at USDT 0.0059. And the same Fibonacci level stopped the price again at the current breakout. The price of ETN must first leave the resistance at 0.00505 USDT behind and then the 78.60% Fibonacci level with the resistance just above it. Previously, the price trend cannot be classified as bullish.

So is ETN's price history bearish?

Yes and no. We are currently seeing the price of ETN in a possible transition phase from a bearish trend to a bullish trend. The problem with the price is the lack of interest on the part of market participants in the price itself. The otherwise low trading volume suddenly increases and leads to spontaneous price movements, i.e. a lot of volatility. These phases are then followed by less volatile movements. Therefore, the transition from trend to trend takes a little.

In any case, we see the price of ETN break the 78.60% Fibonacci level and then make a higher high at the resistance at 0.0065 USDT. Whether an increase above the 61.80% Fibonacci level above it will succeed is in the stars. This is close to a psychological price mark of 0.0070 USDT and could demand a lot from the price. In addition, 61.80% is a common point for a price reversal.

ETN in the hourly chart

In the hourly chart we see confirmation of our assumption. The price was able to hold the price level at 0.00505 USDT at times. However, we are also seeing a bearish divergence in the RSI indicator, which could indicate a price reversal. This can either have already been played out or it can still take place.

Source: Tradingview

A possible course of the price could therefore look like this:

There is a bearish move back to the ascending support line. From there the price of ETN bounces off and struggles through the resistance at 0.00505 USDT. After successfully confirming the resistance as future support, it then moves up to USDT 0.0059 and then to the new higher high as it continues.

Conclusion on the analysis of Electroneum (ETN)

So-called small caps, i.e. cryptocurrencies with only a small market capitalization, often have a low trading volume. As a result, price movements are usually small. If the trading volume then suddenly increases, highly volatile fluctuations occur. Therefore, forecasts of these small caps are not too easy and are usually even more speculative than forecasts of e.g. the top 50 of the largest cryptocurrencies.

Electroneum (ETN) in any case presents itself in a possible transition phase from a bearish course to a bullish course. We have set out the possible scenario for this. Incidentally, if the price falls back below the falling resistance line, it could end in a long downward phase. This is only mentioned in passing to round off this analysis.