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Ethereum Price Preview December 14 – December 20

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Last week saw major developments in Eth2 staking adoption, as well as fundamental indicators such as the ETH node count overtaking Bitcoin’s for the first time. Let’s take a look at the market factors underpinning Ethereum’s price action, and what to expect in the coming week.

Grayscale Buys 100,000 ETH as Demand Rises

Digital currency investment firm, Grayscale, bought 105,927.51 ETH worth over $62 million at the time of purchase on December 09. The firm also bought 1,276 BTC, adding $241 million worth of crypto to their portfolio overall.

While Grayscale did not make a public statement, CEO Barry Silbert retweeted the above tweet describing the details of the purchase. A week earlier, Grayscale’s managing director Michael Sonnenshein commented in a Bloomberg interview that demand for Ethereum is on the rise. 

“There’s a growing conviction around Ethereum as an asset class,” said Sonnenshein, adding that ETH “appears to be maintaining platform leadership status.”

Ethereum ETF Launches in Canada Despite Rocky Start

December 11 saw the launch of the world’s first regulated Ethereum ETF. An ETF, or exchange-traded fund, is an investment vehicle typically traded on a stock exchange, and The Ether Fund is no different. Launched on the Toronto Stock Exchange, the fund opened trading at $10.80 per share after raising $76 million in an IPO.

Trading wasn’t available at the opening bell due to an issue in closing the IPOs prospectus, resulting in a two-hour delay. Despite this, the fund saw an intra-day high of $11.48 and ended the day at $11.02, 2.5% higher than opening price while actual ETH price fell approximately 0.5%.

The crypto space has been waiting for ETFs to launch for years, as these types of investment products are expected to attract more institutional, corporate, and accredited investors to the space. 

Of course, the issue is divisive, with figures like Andreas Antonopoulous pointing out that a collateralized Bitcoin ETF would result in exchanges having more influence when it comes to consensus decisions. ETF investors are speculating on price action and do not personally receive any crypto when buying shares.

Discussion Around Stablecoins Heats Up

Following the announcement of Facebook’s Libra launch and the subsequent STABLE Act proposal to regulate stablecoins, the German Finance Minister issued a strongly worded statement on the issue.

After the latest G7 meeting last week, Olaf Scholz stated that governments must monopolize control over the creation of money by any means necessary.

“A wolf in sheep’s clothing is still a wolf,” said Scholz. “It is clear to me that Germany and Europe cannot and will not accept its entry into the market while the regulatory risks are not adequately addressed.”

Facebook aims to launch the Libra cryptocurrency, newly renamed as Diem, in Germany and throughout Europe at some point in 2021.

The launch of an independent corporate stablecoin with serious financial backing was cause for concern for governments worldwide, and in the U.S., congresswoman Rashida Tlaib proposed a new bill that would require any blockchain running stablecoin code to be licensed by the government.

In theory, the bill could make running an Ethereum node illegal if passed, along with relegating stablecoin technology to the control of central banks. Circle CEO Jeremy Allaire wrote an open letter to the U.S. Treasury in an effort to foster communication around the issue.

Allaire commented on the efforts of some aspects of government “to “plug a hole” by significantly constraining how financial intermediaries can interact with public blockchain networks.” He voiced his belief that “the proposal would inadequately address the actual risks that are at issue, would significantly harm industry and American competitiveness, would continue to yield economic and industry advantage to Chinese firms,” warning of the damage the bill could do to blockchain technology.

An excellent interview with Peter Van Valkenburgh and Jerry Brito on the Bankless podcast provided some excellent insight into the scope of the STABLE Act.

ETH Fundamentals Remain Strong Despite Weekend Pullback

From January 01 to December 10, the number of active Ethereum addresses rose 140% to 379,249, a clear indicator of network strength.

The amount of gas fees spent on ETH deposits to centralized exchanges has fallen to 1%, pointing to healthy market liquidity.

Many analysts believe that ETH is consolidating in preparation of a potential breakout this week. A pullback could take price back down to $418 based on previous resistance levels, and a successful consolidation at this point could clear the way to an $800 price point on ETH in the near future.

Media Roundup

The World Blockchain Summit is on December 15 as an online event. Cardano Foundation CEO Frederik Gregard will be in attendance, along with representatives from IOTA and the EU parliament. The event is broadly focused around discussion on blockchain technology and digital asset development.

The FTX 2020 online conference boasts 10,000 members in attendance this year and over 50 different speakers. The speakers hail from Y-combinator, Sequoia Capital, PayPal, Mastercard, and many more. Discussion will focus on the state of business in 2020 due to the economic crisis, and how Fintech and other tech solutions can help matters.

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Conor Maloney
Conor Maloney Analyst