In last week’s piece, we discussed whether ETH was preparing for a rally or not amid slightly lower prices from the week before. This week, we’ll take a look at some huge developments in the crypto world, along with some technical analysis regarding near and long-term ETH prices.
El Salvador Makes Bitcoin Legal Tender
El Salvador became the first country to make Bitcoin legal tender last week, an unprecedented milestone in the history of cryptocurrency.
Bitcoin can now be used to purchase any goods or services throughout the nation of 6.4 million people, and refusal to accept Bitcoin is now illegal.
El Salvador does not have its own currency, making the official currency of the country the U.S. dollar and now Bitcoin as well.
President Nayib Bukele launched plans for zero emissions Bitcoin mining using El Salvador’s volcanoes as geothermal energy sources for the scheme, adding that El Salvador would offer citizenship to people investing three Bitcoins in the country.
The government of El Salvador will guarantee convertibility of any Bitcoin transaction to dollars at the time of transaction, removing the risk of volatility on the part of vendors.
Many in El Salvador rely on money being sent home from abroad, but 70% of people in El Salvador lack access to traditional financial services. The use of Bitcoin is aimed to facilitate fast, 24/7 remittances, and President Bukele stated that “it will bring financial inclusion, investment, tourism, innovation and economic development for our country.”
EIP 1559 Draws Closer
Ethereum Improvement Protocol 1559, a protocol which will deflate ETH supply by periodically burning ETH paid to miners, saw further progress made last week.
ETH Core dev Tim Beiko stated that the test blocks for the testnet were set on June 11. Technically, Beiko says, the protocol could go live as early as June 25, although it’s more likely that we’ll see it launch in late July or early August.
EIP1559 is a major update that could contribute to upward price momentum for ETH by making ETH a rarer asset and reducing network fees, making Ethereum easier and more desirable to use.
Reddit Cofounder Endorses ETH
Reddit cofounder Alexis Ohanian voiced his support for Ethereum last week, stating on CNBC’s Squawk Box that much of his cryptocurrency holdings are in ETH and later calling ETH “ultrasound money.”
Reddit, which is the 7th most visited website in the U.S. and 18th most popular site in the world, integrated Ethereum-based tokens last year to offer user incentives on various site forums.
Ohanian also registered a name on the Ethereum Name Service last year, while in 2019, his VC firm Initialized Capital invested in an Ethereum-based game called Skyweaver.
The tech founder commented on Reddit’s influence in the “meme stock” frenzy largely fuelled by subreddits like WallStreetBets in which retail investors flocked to assets like Dogecoin, GME, and AMC. Ohanian stated that Reddit allows retail investors to follow trends in real time, but added that “momentum investing is nothing new.”
ETH Price Trend
Following heavy price corrections earlier this month, ETH has encountered resistance at $2,552. Failure to penetrate that resistance caused lower highs to be formed last week, perhaps indicating an incoming price dip.
TA suggests that support at $2,177 and $2,077 could lay new ground for a significant upswing should those levels be reached and consolidation be allowed to occur. The number of active Ethereum addresses has seen a significant decrease from 764,000 to 505,000 since May 13, indicating reduced interest in ETH in the near term.
The 365-day Market to Realized Value model indicates that 39% of ETH holders are still in profit, and there’s a possibility that more of these investors will realize those profits and create downward selling pressure for ETH.
At the same time, the percentage of ETH supply accumulated by addresses holding between 1 million and 10 million ETH rose from 17% to 17.8% since May 22, indicating that whales expect ETH price to increase long-term.
Miners Summit 2021 will be held on June 15-16 in Missouri, acting as a “showcase for providers of hardware and software for data centers and blockchain technology.”
Sponsors, energy suppliers, and economic development stakeholders will have a chance to rub shoulders and discuss everything from technology, energy requirements, government incentives and tariffs regarding crypto mining and data center technology.
The Conference.NFT takes place online on June 17, educating attendees on all things NFT-related. Speakers include Aave CEO Stani Kulechov along with representatives from ConsenSys, Netflix, ArtBlocks, ETHBerlin, and more.