Ethereum News Update
Ethereum prices are down on Wednesday morning, but then again, so are prices for all the major cryptos. Bitcoin, Ripple, Litecoin, Cardano, Stellar—they all have flashing red numbers beside their names.
This is not surprising.
Cryptocurrencies are in a bear market right now. I expect the entire market to move in tandem, except when there’s specific news in the opposite direction. And that’s where things get weird.
One of the “altcoins” on Ethereum’s platform got very good news yesterday, yet its price was down 6.4% overnight. How is that possible?
Before we get to the price analysis, let’s backtrack for a moment. Which altcoin are we talking about?
It is called the “Basic Attention Token,” or BAT, and was developed by a blockchain startup known as Brave. It is supposed to combat fake news by introducing an Internet browser on which consumers, advertisers, and content producers can transact around attention.
(So if you spend a lot of time reading a story, your attention toward it becomes the defining metric for the story’s worth.)
What makes this token so appealing is that it actually serves a purpose in Brave’s business model. The only thing Brave needs now is for major news outlets to start accepting BAT payments.
Britain’s The Guardian newspaper joined the platform recently, which was a very big step in the right direction. But yesterday, rumors spread like wildfire across Reddit claiming that The Washington Post joined Brave!
That’s right. The same newspaper that broke Watergate, the Pentagon Papers, and countless other stories has apparently lent its enormous credibility to a minor blockchain project. Surely that’s worth a few points to the upside, right?
Apparently, the market disagrees.
BAT prices are down 6.38% in the last 24 hours. The reason, I think, is because ETH/BAT trades aren’t available on major exchanges, making this a liquidity problem. And if this is true for BAT, then it is likely true for dozens of other cryptos.
The question I asked myself upon noticing this problem is: Are ETH prices hindered, not by liquidity constraints of ETH, but by liquidity constraints of tokens that raised money on Ethereum’s platform?
I came to the conclusion that yes, this is a bit of a problem. But it’s a problem of infrastructure. Sooner or later, some market participant will build an Ethereum-first exchange with enough liquidity to solve these issues.
Whether or not this happens within the next three months is irrelevant to our Q2 Ethereum price forecast. Our price target for that time horizon remains firm at $1,500 for a variety of other reasons that you can find here.