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Hi friends-
When is ETH likely to re-take its old highs?
Today I'm comparing the recovery experienced so far in ETH since its summer 2021 low point vs. the last 2 ETH recoveries from drawdowns of at least 50%. Something interesting has emerged.
First, let's zoom out and define the recoveries we are measuring against on the chart below. The first recovery was back in 2017 after a drawdown of about 60% using daily data. You can see that it recovered quite rapidly though. The second was in 2018 and represented a drawdown of approximately 94% (ouch!). This recovery was quite prolonged and it took a few years to to reclaim its prior high. The third is the one we are in now and I'm measuring the recovery since July 20th of this summer when ETH traded down to around 1786. So the question is, are we on track for a recovery more like #1 or #2?
I plotted the paths of each of the three recoveries defined above vs. the # of days since each recovery began. You can see below that so far, this looks more like the 2017 experience in that we snapped back rather quickly only to have another fairly sizeable sell-off. The timing, shape, and magnitude of these two are amazingly similar and very distinct from the 2019 experience. All three exploded for the first month or so but after that, 2017 and 2019 started to diverge.
Please also note the fairly significant sell-off the 2017 recovery hit about 50 days in after a huge rally.... close to the same amount of time we are now into the current recovery. Deja vu anyone?
In the next chart, I combine the paths of the 2017 and 2019 recoveries by taking the average of the two and comparing the current one to that. When compared to the average recovery, you can see that we might have gotten a bit out over our skis a bit.
In summary, if past is prologue, the current recovery is remarkably similar to what we experienced in 2017. If we stay on that trajectory (that is a big if), then we may hit another round of pretty severe selling before finally taking out the prior highs in relatively short order. If you missed this recent rally, long-term hodlers may still get another good buying opportunity soon!
As always, this is not investment advice and please do your own research.
Cheers,
NZFX
