Ethereum Is Down, But Not For Long

This Is Why Ethereum Will Lead The Rebound

The entire cryptocurrency market fell hard last week as a double shot of negative news hit the market. The first, a paper published by students at the University of Texas, says that Bitcoin’s price run up in 2017 was due to Tether Dollar manipulation. Tether Dollar, a cryptocurrency tied to dollar deposits, is supposed to mimic the US dollar but has long been though to be flawed because there is no way to know that the number of Tether Dollars equals the number of dollars on deposit with the Tether network. The second, word that Bitcoin futures, coming from mega bull Tom Lee, had a negative impact on BTC prices as expiration approached.

The good news is that neither of these events has any relation to the underlying value of BTC, and both provided opportunity for new purchases at long-term lows. In the first case, if Tether Dollars were manipulated in order to run up the price of BTC it is Tether that is worthless, not BTC. In the case of the second, futures trading and the impact of options expiration is a phenomenon most commodities face and that, ultimately, has little affect to BTC price value long term.

Ethereum, The One Crypto To Rule Them AllĀ 

Meanwhile, Ethereum has made several announcements over the past two week’s that bodes well for the world’s most advanced blockchain. The first is progress on the Plasma network. Plasma is a blockchain application that will launched on top of the Ethereum network in an effort to speed up transactions. It is part of a larger scaling plan that will eventually allow the launch of private blockchains across the Ether network and ultimately pave the path for debit transactions comparable to the current banking/CC system on the block chain.

The second is updates to the sharding protocol. Sharding will divide across the network so that only those servers attached to a specific Shard will have to process transactions within the shard. This is expected to enhance security as well as reduce transaction times. The third is an update to the Casper protocol, a protocol that will switch Ethereum from proof-of-work to a hybrid proof-of-work/proof-of-stake blockchain, and also increase network speeds.

The most important announcements comes from US regulators. The CFTC commissioner says that blockchains are a tool for changing our daily lives, a very optimistic statement from someone at the center of the regulatory debate. The SEC followed that up with an announcement they’ve decided (no surprise to us) that Ethereum is not a security and that buying/selling ETH is not a securities transaction. This is good for two reasons as it means less SEC meddling with Ethereum exchanges and paves the way for an Ethereum futures contract.

At the time of this writing ETH is down nearly 5% on the day but off the weekly low, and well off the long term low. The coin appears to be at an extreme low, confirmed by the indicators, and ripe for reversal. The indicators are both divergent from the low and showing bearish crossovers, consistent with upward movement in prices. A move up may find resistance at the short term moving average, a break above that would be bullish.