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Ethereum Price Preview: January 18 – January 24


Our latest report covered regulatory milestones with banks greenlit for stablecoin use, followed by upward price action. Over the past week, more promising news in the crypto banking and regulatory sectors has emerged, painting a positive picture for ETH bulls.

Market Fundamentals

Ethereum saw a surge of demand last week, with exchange reserves plunging by 20% in a matter of hours amid heavy buying pressure.

One Twitter user stated that this was partially due to an internal Bitfinex transfer of 600,000 ETH. However, with price at the highest point since January 2018 and exchanges reserves down over 2 million ETH since last August, the fundamental indicators support the case for an ongoing bull run in the eyes of many analysts.

Source: Glassnode

Progress was made in the development of Ethereum Layer 2 last week with the soft launch of the Optimism scaling solution, which now allows for SNX token staking for the Synthetix exchange. Optimism is due to launch fully between late February and early March, increasing Ethereum’s transaction processing capabilities.

However, the mining appears divided over the controversial EIP-1559 protocol, with a Bitfly Twitter poll showing 61% of its 9,000+ participants voicing their lack of support.

Previous surveys showed approximately 90% of crypto mining communities equally voicing their dissent with the proposal, which aims to make the mining fee more predictable and reduce network congestion. Miners have argued that EIP-1559 may also reduce their mining income.

Billionaire Mark Cuban recently tweeted about Aave to his 8 million followers, many of whom likely aren’t even familiar with Ethereum. While Cuban’s comment was regarding high gas fees being an issue, the growing public awareness of cryptocurrency and blockchain technology is likely to introduce new investment over time.

Finally, the controversial right-wing social media platform Gab posted a tongue-in-cheek comment to state that staff were considering hosting the platform on the Ethereum network to “trigger” Vitalik Buterin.

While the comment may have been in jest, it’s possible that Gab is genuinely viewing Ethereum as an option following the right-wing Parler social media platform being banned from major app stores and then suffering a significant security breach before shutting down.

Banking on Ethereum

The US Office of the Comptroller of the Currency (OCC), headed by former Coinbase Chief Legal Officer Brian Brooks, released a statement last week about the potential for “self-driving” or autonomous banks through blockchain technology, bringing more mainstream awareness to the capabilities of decentralized finance.

The OCC also approved a request by Anchorage to become the world’s first federally chartered digital asset bank. Anchorage now has the green light to provide banking services to those members of the crypto community not willing to act as their own bank. This development may solve a pain point for many investors on the fence about crypto, while still keeping initiatives such as decentralized banking and self-banking on the table.

Anchorage described the OCC approval as “a major milestone, not only for us as an organization, but also for the crypto industry and the wider financial world. Crypto deserves a bank, and we are immensely proud of being approved as the one to set the standard.”

Meanwhile, global banking giant Goldman Sachs recently issued a request for information (RFI) in regards to the bank becoming a digital assets custodian. “Like JPMorgan, we have issued an RFI looking at digital custody. We are broadly exploring digital custody and deciding what the next step is,” said a Goldman Sachs source.

Progressive Crypto Regulation Incoming

In regulatory news, the Biden administration looks set to name former Commodity Futures Trading Commission (CFTC) chair Gary Gensler as the new head of the SEC. Trump pick Jay Clayton is stepping down after a four-year term marked by lenient regulation for Wall Street, which is likely to change under Gensler, as well as unclear direction on crypto regulation which left many in the industry unsatisfied.

Clayton was a former Wall Street lawyer with ties to many of the companies under his new regulatory jurisdiction, a source of much criticism from those in the legal and financial sectors. Gensler’s nomination is largely supported by the crypto community, as he has previously advocated for greater protection for currencies like Bitcoin. He is, however, likely to continue to pursue crypto projects he feels are selling unregistered securities.

Billionaire investor Tim Draper stated that “It is good to have an ex-banker in there who is smart enough to recognize the value of Bitcoin and other cryptocurrencies to building wealth and value in society.”

ETH Price

Ethereum faces a potential wall of resistance in the $1,230 – $1,253 range where above-average trading volume previously took place. 118,000 addresses are currently holding nearly 386,200 ETH in this price range, and that area may prove difficult to break through despite climbing momentum.

However, ETH is also sitting right on top of a solid foundation of support between $1,121 and $1,156 that looks set to hold off anything but major selling pressure. With a slew of indicators pointing to strong market fundamentals throughout the past week, the near-to-mid term case for the ETH bull run continuing looks strong to many analysts.

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Conor Maloney
Conor Maloney Analyst