On Wednesday Bitcoin came within a few hundred dollars of breaking its all time high before rapidly correcting after a nervous market – already expecting resistance at this key level – caught wind of a potential regulatory storm brewing in the US Treasury.
The rumour, which was sparked by Coinbase CEO, Brian Armstrong, suggested that US Treasury Secretary, Steve Mnuchin, would rush through some heavy handed regulation in the last days of the Trump administration that targeted “self-hosted” wallets i.e. wallets that weren’t custodied by financial institutions.
Following Armstrong’s Tweet, the price of ETH fell from $621.50 to $486.47 with a small recovery that was quickly stifled by a report from The Block that revealed China had seized some $4.2 billion of cryptocurrencies from the PlusToken ponzi scheme.
The report quoted the court as saying “the seized digital currencies will be processed pursuant to laws and the proceeds and gains will be forfeited to the national treasury”, a phrase that quickly sent prices tumbling as traders feared a future cryptocurrency sell-off. This speculation was fuelled on Twitter before being scaled back.
It’s likely that any sale of cryptoassets would have been made before the news broke, although a recent transfer of $82M EOS tokens from a Plustoken wallet may cast doubt on that idea, possibly indicating that the selling has not started or at least is not yet complete.
To add even greater volatility, Facebook’s Libra blockchain is now tipped to go live in January, albeit in a much more watered-down version than was discussed in the summer of 2019. While Libra looks likely to become a permissioned and heavily restricted “competitor” to Ethereum, the potential for onboarding of hundreds of millions of users to cryptocurrency is a breakthrough in itself. Facebook’s entry into the cryptocurrency space was credited with a number of price rallies throughout May, June and July last year.
While all this macro instability and uncertainty remains ongoing, Ethereum’s Eth2 genesis is set for 12pm on December 1st; a launch that, if successful, could once again focus attention on Ethereum’s technology and the rapid progress that it continues to make.