Ethereum News Update
Earlier this week, just days before the U.S. House of Representatives would hold a hearing on cryptocurrencies, one government official turned his attention toward the American government’s favorite punching bag: Venezuela.
The U.S. official in question is Florida Senator Bill Nelson.
Senator Nelson sent a letter to the Treasury Secretary on Monday arguing that “rogue regimes in Russia and Venezuela” are trying to use cryptocurrencies to skirt U.S. economic sanctions. (Source: “United States Senate – Bill Nelson, Florida,” United States Senate, March 12, 2018.)
For those who are out of the loop, Venezuela issued a “national cryptocurrency” last month. It is called the “Petro” token.
According to some reports, Venezuela raised as much as $763.0 million during an initial private offering. Of course, I would like to see that number verified by authorities outside Venezuela, but for now, I’ll work with the assumption that those figures are correct.
Why does this matter?
Well, sanctions are the soft power mechanisms by which the international community can rein in “human rights violations, political repression and the jailing of opponents, undermining democratic institutions, corruption, and widespread economic deprivation.” (Source: Ibid.)
They help prevent war.
In his letter, Nelson puts pressure on the Treasury’s Office of Foreign Assets Control (OFAC) to find a way of enforcing current sanctions. This means OFAC could actively interfere with a cryptocurrency token, sparking fears of broader government action against the sector.
That’s where we get to Ethereum prices.
ETH prices are already in freefall, having tumbled more than 7.75% in the last 24 hours alone. The Ethereum to USD exchange rate was sitting at $608.42 at the time of writing, but it looks ready to drop below $600.00 at any moment.
Aggressive action by government regulators, even if it is toward the Petro, could be perceived as an increase in regulatory risk. In other words, Venezuela’s little experiment in cryptocurrencies could end up hurting the entire industry, including Ethereum prices.
It is getting harder and harder to justify our $1,500 Ethereum price forecast for Q2, but then I go back to look at the fourth quarter of 2017. I remember that cryptocurrencies are just as explosive to the upside as they are lethargic to the downside, and that gives me hope.