ETH has grown over 620% in value since this time last year. Let’s take a look at the market forces behind the current bull run, as well as potential areas of support and resistance that may crop up over the coming week.
Fundamentals Improve With Scaling on the Horizon
Layer 2 scaling solution developer Optimism will begin a “trial run” of its mainnet on January 15 using the Synthetix exchange as its headline dapp. Optimism’s solution may prove to be a vital aspect of Layer 2 infrastructure, and a successful test launch will firm up confidence in Ethereum’s ability to scale, improving buy-side fundamentals in the eyes of the markets.
Optimism has cautioned that bugs and glitches may occur, as Synthetix will experience the full suite of experimental scaling solutions. Optimism allows Ethereum smart contracts to be deployed onto the Optimism Virtual Machine (OVM) requiring – in most cases – minimal changes to the code.
The project team aims to hold the upgrade keys for the first six months after testing, and have cautioned the community not to consider the testnet as a finalized solution until the keys have been relinquished. The public mainnet is due for release on March 15.
Meanwhile, the Uniswap Grants program is gearing up for launch, opening a Twitter account last week as the program prepares for its first public announcement. The grant program will have a $3 million annual budget for the issuance of grants aimed at supporting and driving development within the Uniswap ecosystem.
Microstrategy has received a major investment from Morgan Stanley following Microstrategy’s $1 billion investment in Bitcoin. Morgan Stanley’s investment represents 10.9% of all Microstrategy’s shares, a huge and public vote of confidence in Microstrategy’s BTC balance sheet strategy, and for many market analysts, a buy signal.
Microstrategy’s investments in Bitcoin were one of the driving forces behind the current bull run, with corporate investment and integration of crypto a hot topic on social media as well as investment circles. Microstrategy CEO Michael Saylor clarified that the BTC investment “was not a speculation, nor a hedge. It is a deliberate corporate strategy to adopt the Bitcoin Standard.”
January 15 Deadline Approaches For Tether
Tether and Bitfinex have until January 15 to release documents to the New York Attorney General (NYAG) disclosing the relationship between the two companies.
The NYAG launched an investigation into Tether in 2018, alleging that the payments processor Crypto Capital lost $850 million in funds held for Bitfinex customers, and that it borrowed the funds from Tether to cover the losses, illegally printing off uncollateralized USDT in the meantime. Crypto Capital’s owners were indicted in 2019 due to their connection to criminal activity and money laundering.
The question of whether Tether is 1:1 collateralized with the US dollar has long plagued the crypto markets, and the revelation that Tether is, as many suspect, uncollateralized, could wreak havoc in the markets.
USDT now has a market cap of over $24 billion, making it the third largest crypto in the market and the largest stablecoin by a margin of nearly $20 billion.
Major Regulatory Milestone With Banks Greenlit for Stablecoin Use
The Office of the Comptroller of the Currency clarified its position on national banks’ and saving associations’ ability to use stablecoins and validate nodes independently.
Banks can now act as a blockchain node operator and can validate, store, and record payments transactions in doing so. OCC head Brian Brooks said the announcement “removes any legal uncertainty about the authority of banks to connect to blockchains as validator nodes and thereby transact stablecoin payments on behalf of customers.” He added that consumers had increasingly demanded the speed, efficiency, and low cost associated with stablecoins.
Jeremy Allaire of Circle, the company behind the USDC stablecoin, described the move as a “huge win for crypto,” adding that the significance of public chains being granted similar powers to SWIFT payments could not be understated.
The OCC announcement follows shortly after public discussion and controversy surrounding the proposed STABLE act which would have severely restricted the ability for stablecoins to operate legally within the US.
Resistance Ahead at $1,350
ETH is on a major bull run, outperforming even Bitcoin over the last 12 months. ETH saw significant growth over the weekend before dropping $100 in conjunction with a BTC price drop. Resistance now lies ahead at $1,350, with the path between that point and the current price looking relatively clear. Beyond that point, resistance is expected at $1,390, the all-time high of $1,425, and $1,470.
On the downside, support may be expected at $1,200, $1,165, $1,100, and $1,050.
In the last 12 months, ETH has grown over 620%, seeing a two-year high last week at $1,350 before ticking back downward to the current price.
The Real World Crypto (RWC) Symposium is taking place between January 11 – 14 online. Featuring speakers from Brown University, Thinking CyberSecurity, and IBM Zurich, the event will cover a wide range of topics in the crypto community.