Cryptocurrency markets made a comeback on September 27 and demonstrated strong gains across the board. One of the strongest performers was AEON, which is based on the CryptoNight protocol.
AEON is sometimes referred to as ‘Monero’s Litecoin.’ This is in reference to its use as a testbed for ideas and upgrades that could be used for Monero (and vice versa). With XMR-USD breaking to fresh highs above the $100 handle, it is interesting that AEON is starting to show some interesting price behavior. Just the gain in value on September 27 alone had some in the small community scratching their heads.
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What is AEON?
Launched on June 6, 2014, AEON uses the CryptoNight-Lite algorithm. An anonymous developer on the Bitcoin Talk Forum named ‘Aeon’ started the project and he (or she) seemed to develop the coin until March 2015. The final message left by ‘Aeon’ was to ‘smooth,’ who is part of the Monero core team and was a fundamental driving force in its early stages:
“smooth you have PM.”
By April 2015, smooth became the lead developer, and a new roadmap was introduced.
First, let’s detail how the altcoin is similar to Monero. AEON is resistant to ASIC mining and can be mined more effectively with CPU’s. Also, it has a privacy focus like its ‘older brother,’ with ring signatures and an opaque blockchain. The altcoin seems to be maintained to a decent enough standard. For instance, during May 2017, the Monero team disclosed a bug of CryptoNight-based coins, and only AEON and a handful of others have reacted and fixed the vulnerability. Finally, the maximum supply for AEON is 18.4 million, closely mirroring its CryptoNight cousins.
So how does AEON differ from its ‘older brother’? In essence, it is a lightweight version of Monero, similar to how the silver-gold comparison is made for litecoin and bitcoin. The altcoin aims to run nodes on smartphones as well as serving as a testbed for Monero, made clear by smooth’s comment from a Reddit post in 2015:
“AEON is certainly targeting running a node on a smartphone, but I don’t think it is possible to completely rule out Monero (someday) doing that too. As answered above by others the idea is to do experimental and perhaps even stupid things. Some of them may be adopted by Monero in time, others may not… So you can think of AEON as a sparring partner to keep Monero healthy and strong.”
As for investing or trading AEON, it comes with high risk, given its experimental nature and low liquidity, but in the long term, it could be very profitable.
The volume is quite low at around $600,000 for the past 24 hours, and there are only two exchanges, Bittrex and HitBTC. Looking at CoinGecko, we see that the developer score is a respectable 57, putting it amongst Vertcoin and Zcoin. The community score is low, with room for growth, and is expected to increase as the key features of Monero are adopted and integrated into AEON.
Price Analysis of AEON
The outlook for AEON-USD is displayed below with the daily chart. On September 27, the market managed to close above the fractal resistance at $1.2081 and reached a fresh high at $1.5014. Also, notice that the Alligator is just starting to fan upwards after a few days of no clear trend. Therefore, we should see the upward momentum continue. Also, notice the high volume for September 27, which illustrates the largest influx of buyers in over one month. The uptick in volume suggests further upside for the price is more likely as more people enter the market.
The Fibonacci tool is also used for the move from $0.3225 in early August to $1.2081 on August 14, and we see that now we have a daily close above $1.2081, we should see the market tend toward the first Fibonacci extension level at $1.7554. The 161.8 percent extension level will provide resistance, as well as the 261.8 percent extension level at $2.64.
The weekly chart below for AEON-USD also paints a bullish outlook. The Alligator indicator is awakening and starting to trend higher. Also, we have obtained the first bullish signal since the market price has been trading above the Alligator, that is we have seen a move above $1.2206. The fractal sell level at $1.2206 is the lowest (and most recent) resistance above the Alligator indicator and provides a strong buy signal.
What this tells us is that an upward trend is starting and we expect bullish momentum to begin to take hold. Given that this signal is on the weekly timeframe, it is suggested that AEON-USD will continue to perform well over the long term.
Moreover, using the Ichimoku cloud analysis, we see that we get a strong buy signal if this week’s close is higher than $1.0959. Examining the chart below, we see that the highest peak of the lagging line (purple) occurs at $1.0959 and with no further resistances provided by this indicator, the room for an upside move is large as a result.
A weekly close above $1.2206 will strengthen this bullish confirmation even further. Finally, notice that the conversion line (blue) has moved back above the base line (red) this week, signaling shifting momentum. Bears have lost control of the market, and we should now see the uptrend begin to take shape, with a move above the recent high at $1.60 imminent.
The chart for AEON-BTC displays a similar structure to that of AEON-USD. A weekly close above 0.00029601 is required for bullish confirmation, as a break of this fractal will open up the recent highs near 0.00050.
Disclosure: The author entered a long position in AEON-BTC in the past 24 hours and is comfortable with the risk/reward of the trade setup described here. Please do your own research when trading or investing in cryptocurrencies as they are highly volatile.