Ethereum News Update
If there’s one fear that haunts cryptocurrency enthusiasts, it’s that governments will attach burdensome regulations to slow innovation across the industry.
So when U.S. regulators—like the U.S. Securities and Exchange Commission (SEC)—started cracking down on the initial coin offering (ICO) market, investors assumed that their worst nightmares were coming true. They turned bearish almost instantly.
From the moment it became public that the SEC was handing out subpoenas, we saw cryptocurrency prices fall dramatically. The market feared that regulators would refashion cryptocurrencies into something like stocks and bonds, an asset class that plays by the rules.
This might be a good thing for cryptocurrencies over the long haul, but it did a lot of damage to the market in a short period. Ethereum prices hit a three-month low last weekend.
There were glimmers of hope yesterday, as the Ethereum to USD exchange rate edged upward, but I’m afraid that more volatility lies ahead. Why? Well, because the march toward tighter regulation is inevitable.
Let me give you an example.
On Monday, President Donald Trump signed an executive order that sanctioned Venezuela’s “petro” token. This was in reaction to Venezuela (and potentially Turkey) raising money through an ICO in order to skirt traditional sanctions.
Banning U.S. citizens from financial dealings with hostile nations is an old trick in geopolitics. It’s called soft power. But now that we’re seeing governments extend that power into the realm of cryptocurrencies, it’s impossible for us to pretend that cryptocurrencies can remain 100% free.
Regardless of what happens next, the important takeaway is that cryptocurrencies now look a little more like traditional assets.
But this isn’t a bad thing.
I mean, yes, regulators are forcing cryptocurrencies to play by the same financial rules as other securities. But that doesn’t have to mean slower innovation. If anything, stricter rules might force the industry to narrow its focus and energy on useful projects, rather than running wild in all directions. At the very least, wasteful projects will be shut down.
As the market adapts to this status quo, I expect to see ETH prices recover. As such, our $1,500 Ethereum price forecast for Q2 remains unchanged.