Last week saw significant milestones in mainstream cryptocurrency adoption, alongside a major setback for one of the biggest digital assets on the market. In this piece, we take a look at the indicators and fundamental factors driving ETH price action.
Regulatory Issues Take Center Stage
Wyoming senator Cynthia Lummis took a stand against proposed U.S. Treasury regulations around reporting transactions, a series of requirements that may affect self-hosted crypto wallets and require them all to be independently verified.
Lummis pointed out that the U.S. is competing with Russia and China when it comes to financial technology, warning the U.S. not to get left behind.
The Wyoming senator indicated that she would oppose regulations restricting or limiting the use of cryptocurrency wallets. She objected to Treasury proposal on the basis that it would likely be implemented without public comment under an “often-abused” section of the Administrative procedure act.
“A hallmark feature of digital assets, like BTC, is the ability to conduct transactions w/out an intermediary. This promotes financial inclusion and freedom,” said Lummis. Coinbase CEO
Brian Armstrong objected to the proposed regulations in November, stating that Coinbase would be forced to attempt to verify the owners of self-hosted crypto wallets in order to permit transactions. This would be a difficult task in the crypto markets and one that offsets the benefits of speed, convenience, decentralization, and privacy that many cryptocurrencies have to offer.
Ripple Effect On The Markets
The SEC sued Ripple on December 22 on the grounds that XRP is an unregistered security, causing several smaller exchanges (and now some larger ones like Bitstamp) to delist XRP and leading to highly volatile price action. The price of XRP has fallen over 38% since the SEC announcement last Tuesday.
The SEC is suing Ripple as well as CEO Brad Garlinghouse and Chairman Christian Larsen in a complaint that alleges the defendants sold Ripple as a capital raise for their business, with XRP tokens representing an investment in that business.
Garlinghouse and Larsen are accused of personally selling $600 million worth of XRP. Garlinghouse called the case an “assault on crypto at large.” However, Ripple has long been accused of being a digital asset, but not a cryptocurrency, as the tokens are highly centralized and minted at the discretion of the company’s founders, with Garlinghouse and Larsen profiting immensely through XRP sales.
The case does serve as a reminder that the SEC has the power to significantly impact the crypto markets, although the regulatory body has already indicated that decentralized, high-cap currencies such as Bitcoin and Ethereum are not securities and as such, investors are likely not at risk of securities regulation.
Ethereum Adoption Continues
Amazon Web Services (AWS) announced its support of Ethereum on December 21. AWS developers can now connect to the Ethereum network and provision nodes in minutes, allowing for “secure networking, fast and reliable syncs to the Ethereum blockchain, durable elastic storage for ledger data, encryption at rest and transport, and secure access to the network via standard open-source Ethereum APIs.”
AWS is a major global computing platform, bringing in $26 billion in revenue for Amazon last year. With 5x more deployed cloud infrastructure as their next 14 competitors combined and 1 million global users and counting, AWS is by far the biggest global player when it comes to cloud computing and development, and its new support of the Ethereum network is a major leap forward in mainstream adoption.
On-chain stablecoin volume exceeded $1 trillion last week, another major crypto milestone that indicates the scale of growth seen in recent years.
The volume was divided as 73% Tether, 15% USDC, and 7% DAI. USDC and DAI have always been Ethereum-based tokens, and most Tether tokens are now based on the Ethereum network as well.
Ethereum’s Bull Market
Ethereum price broke $730 today, hitting highs not seen since May 2018 and now up 462% since the start of 2020.
Grayscale’s Ethereum Trust (ETHE) now holds over $1.7 billion in ETH, and many analysts in the space believe that when Bitcoin’s price rally slows down, it will be ETH’s time to truly shine. ETH fundamentals have seen firm and consistent growth over the past year with institutional adoption and global brand recognition on the rise, as well as growth in the DeFi sector which now boasts a TVL of $13.1 billion.
CME Group is set to open trading for ETH futures in February 2021, and this is expected to bring more attention and investment to the ETH ecosystem. Given how much stronger the network is compared to the previous bull run of this magnitude, ETH’s all-time high of $1,400 certainly seems within grasp for 2021.
EthBuilders NYC is hosting a meetup on December 28. The group has over 1,600 members, and the event will focus on developments and updates in the DeFi space as well as discussions on decentralized economies and technology.
The Hannover Blockchain group, with over 600 members, is hosting an event on December 30 in Hannover, Germany, to discuss the crypto ecosystem in a casual setting. The group welcomes participants from all areas of expertise and also facilitates the sale of bitcoins at the event.
Finally, Toronto Monero is hosting a meetup open to any of its 600 members to discuss the technology, economics, and politics surrounding Monero as well as the crypto space as a whole. The meetup will take place on December 30, and business owners curious about Monero are encouraged to attend.