Ethereum News Update
Cryptocurrencies turned into a vortex of despair this week, dragging down all-but-one of the top 100 digital assets. Ethereum was not the exception—that was DigixDAO.
ETH lost 19.92% of its value, driving the crypto below $1,000 for the first time this month. The Ethereum to USD exchange rate was at $902.97 at the time of writing.
Although losses have been stacking up for days, India’s crackdown drove the pessimism into overdrive.
The incident began with India’s Finance Minister Arun Jaitley’s speech on the budget, in which he reiterated his contempt for virtual currencies. (Source: “Arun Jaitley has just killed India’s cryptocurrency party,” Quartz, February 1, 2018.)
“The government does not recognise cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities or as part of the payments system.”
These comments are damaging enough by themselves. But words transformed into policy are much more dangerous. And that is precisely what investors are afraid of right now.
Many suspect the full government supports Jaitley. It’s no coincidence that his ministry called cryptos a “Ponzi scheme” last year, or that the Prime Minister has announced a committee to evaluate crypto-risks.
Ethereum Price Chart
As a result, there was an ETH price crash after this news broke. India is one of the biggest markets on the planet, after all, with more than one billion consumers.
Moreover, India has the ability to leapfrog old technologies. The country is getting rich at such a rapid pace—and from such a low base—that it can achieve widespread adoption of new technologies without ripping down old technologies.
Because it does not have the old technologies!
Cellphones are a prime example. Many Indians (predominantly those living in rural areas) did not have a landline phone in earlier decades. However, most of them now have cellphones because their increase in wealth coincided with a leap forward in technology.
Put another way, they leapfrogged old technology.
Crypto bulls had hoped this would occur with virtual currencies too. Namely, that rather than achieving widespread use of debit cards and credit cards, India could leapfrog ahead to digital assets. That dream came to an end this week.
Ethereum prices are bound to suffer more volatility this year. The regulatory environment is tightening everywhere, driving casual investors from the market. However, they will return as the market outlook grows clearer.
I continue to believe in our Ethereum price forecast for 2018. By the end of Q2, ETH prices could hit $1,500, and by the end of 2018, they could climb as high as $2,500.