Ethereum Price: $184.30
Ethereum Price (BTC): 0.019516BTC
Market Cap: $19.96B
ETH Network Dominance*: 69.64%
7 Day Candle**: $177.37 / $199.38 / $153.50 / $184.30
As Facebook CEO, Mark Zuckerberg, walked into a congressional hearing to discuss the company’s blockchain project, Libra, the price of Ethereum had already tumbled by 8%. Regulatory scrutiny, public perception and long bureaucratic delays for Libra have tempered markets since Ethereum’s one year high in June of $365.76, when the Libra project was first announced. Unfortunately for investors, as Zuckerberg fielded questions, this scrutiny and delay seemed evermore likely to persist, which was reflected in the markets early last week.
The hearing, which was titled “An Examination of Facebook and Its Impact on the Financial Services and Housing Sectors“, kicked off with an opening statement by Chairwoman, Maxine Waters, which talked almost exclusively about civil rights and inequality within Facebook. From that point on, the hearing didn’t have a hope of staying on course. It would go on to bounce between the irrelevant and the irreconcilable. The discussion reached an undeniable low when congressman Bill Posey appeared to take issue with Facebook’s policy against anti-vaccination groups, one which had Zuckerberg visibly alarmed. And when a congressman or woman ran out of trivialities to grill Zuckerberg on, they would finish with a sentence or two of grandstanding before announcing that they had ran out of time – denying any response.
Not all of the questioning was contextually absurd. One better-versed Congressman was concerned about the US dollar’s dominance in the Libra basket of currencies (Libra will be backed by multiple currencies to remain stable, not just one). If the basket held – for example – 60% of its value in US dollars, what’s stopping the Libra Association for including more Euros or Yen in the future and lessening the dollar’s involvement? This would have the potential to weaken the USA’s ability to enforce economic sanctions in the future. When it became apparent that Congress would, indeed, not be able to enforce the use of US dollars in the Libra basket, the brief silence in the room was deafening.
Confident Words From China
What blew the roof from this Washington circus was what happened a few days later. After months of Libra warning officials about the loss of technological dominance to China, the Chinese President, Xi Jinping, announced the government’s plans to take a leading role in blockchain technology – accelerating “the standardization of blockchain research, which will, in turn, give China more power in setting rules and standards internationally”.
The announcement sent Bitcoin rallying by nearly 20% from $8,664.60 to $10,543.00 in less than two hours, with the price of Ethereum and many altcoins following suit. Searches for both Bitcoin and Blockchain on the Chinese network, WeChat, also saw a huge spike in volume and the negative sentiment building ahead of Zuckerberg’s testimony had flipped (and then some).
But the Washington circus now had an elephant in the room.
The Libra position is clear: if the US discourse continues to be filled with irrelevant concerns, misunderstandings and an egoistic desire to grandstand, the delays to the development of US blockchain technology could see the transition of economic dominance to China — but it’s not too late.
Investors in the space can now be hopeful again. Not only will China push the envelope on blockchain technology (with the potential to be more friendly towards public chains like Ethereum), their effort will undoubtedly lead to an equal or greater response from the US.
What will be fascinating to see is how the two opposing approaches play out. On the one hand, China’s government will be leading its blockchain initiatives from the top down (as can be seen with their digital renminbi), on the other – should the US clearly define a regulatory framework (and this may now be expedited) – the development approach will be bottom up.
The US is not in a position to compete globally in the public sector (last week’s circus was a damning example of that). The government will have to find innovation in the private sector through projects like Libra; accepting that the status quo simply will not hold through the next decade. The US response to China’s announcement last week can only be to lift the lid on blockchain development.
The rumbling of these two economic powers is one to watch closely. A US response in the form of a market-wide “green light” could well trigger the next cryptocurrency bull run, particularly in the build up to Bitcoin’s halvening and ETH 2 in 2020.
– Nick, Owner EthereumPrice.org