Crypto Recovery Stalls at $350.0-Billion Level

By Gaurav S. Iyer, IFC Published : March 22, 2018

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Ethereum News Update

Ethereum prices are down six percent on Thursday morning as the market slips back into angst and fear about upcoming regulations.

These gyrations have become a normal part of the Ethereum to USD exchange rate. They don’t surprise me. One number that did catch my eye, however, is the total cryptocurrency market cap—it fell below $350.0 billion…again.

eth-price-chart-for-22-mar

After more than a week of treading water, the total market cap finally made a bullish run yesterday. It reached as high as $356.09 billion in the early morning hours, before receding back underwater by the afternoon.

What does this mean? Well, it seems to me that $350.0 billion has become an important threshold for testing the resiliency of a market recovery. If prices can hold above this level for a sustained period, we might see a bullish pattern develop.

However, a strong catalyst is needed to expedite this trend. Based on today’s leading Ethereum news, I don’t see that happening in the near future. Below are today’s main stories, if you don’t believe me.

  1. Korea is putting the screws on cryptocurrency exchanges again. Regulators are auditing banks to see if cryptocurrency exchanges are adhering to “anti-money laundering” laws. Meeting these compliance regulations are increasingly important to South Korean officials. They won’t hesitate to crush exchanges, despite the fact that doing so would eliminate a big chunk of trading activity. (Source: “Korean Regulators to Probe Banks’ AML Measures for Crypto Exchanges,” CoinDesk, March 22, 2018.)
  2. U.S. Treasury might sanction individual cryptocurrency wallets. In traditional banking, the U.S. government puts unsavory characters on a watchlist kept by the Office of Foreign Asset Control. Cryptocurrencies used to exist outside of this framework, but as I said last week, cryptos are becoming more like traditional asset classes. The Treasury has expanded its authority to hold digital assets accountable to the same standards. (Source: “Questions on Virtual Currency,” U.S. Department of the Treasury, March 22, 2018.)
  3. The Fed made everything risky again. Yesterday, the Fed raised interest rates again, this time under the supervision of new Fed Chair Jerome Powell. The central bank also steepened its interest rate path going forward, in effect, moving yield curves up for almost all assets. This is a stark change from the past decade, when interest rates were at historic lows and investors were willing to try riskier assets.

Analyst Take

As you can see, none of these are particularly bullish stories. But I didn’t expect them to be. Cryptocurrencies are in the midst of a transformational moment right now, making it hard to find good news. Everything is going to be messy and confusing.

However, Ethereum is protected by the fact that it adds real value to the world. With this in mind, we are holding on to our $1,500 Ethereum price forecast for Q2 in the hopes that some clarity is achieved in the next three months.

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