By Gaurav S. Iyer, IFC Published : January 5, 2018
As I sit down to write this market update, Ethereum’s price is the most glaring number to report. Namely, that the average ETH price topped $1,000 for the first time ever.
The crypto advanced 4.63% against the U.S. dollar, bringing the Ethereum to USD exchange rate to $1,025.07. It is a landmark moment, to be sure.
However, I feel compelled to include a few other scraps of information that caught my eye. Some of them are quite disturbing.
For example, the Commodity Futures Trading Commission (CFTS) is meeting to review complaints about Bitcoin futures. Ostensibly, the issue is whether or not there should have been public debate before the Chicago Board Options Exchange (Cboe) and Chicago Mercantile Exchange (CME) were allowed to list Bitcoin futures.
But there are other, deeper concerns…
How can anyone, for instance, take a short position on Bitcoin futures without risking financial ruin? The volatility is unlike anything we’ve ever seen, meaning that marking to market would be an exercise in cruelty.
Members of the Futures Industry Association (FIA) voiced these concerns last month, but too many market participants were blinded by optimism. Now it appears as if the CFTC is reconsidering its position.
Daily Ethereum Chart
This could harm Bitcoin futures, but the damage could extend to Ethereum prices as well. Part of our bullishness on ETH rests on the creation of Ethereum futures, which would pave the way for cryptocurrency exchange-traded funds.
Both of these products are now in jeopardy. Here’s a statement of concern from the CFTC. After reading it, I felt much more unsure about where ETH prices are headed. (Source: “Chairman Giancarlo Statement on Virtual Currencies,” CFTC, January 4, 2018.)
“In addition to the nascent stage of the technology itself, risks associated with virtual currencies include: operational risks of unregulated and unsupervised trading platforms; cybersecurity risks of hackable trading platforms and virtual currency wallets; speculative risks of extremely volatile price moves; and fraud and manipulation risks through traditional market abuses of pump and dump schemes, insider trading, false disclosure, Ponzi schemes and other forms of investor fraud and market manipulation.”
Furthermore, the Bank of England withdrew its plans to launch a national cryptocurrency. While this does not affect ETH prices directly, it does add a data point to a troubling trend—one which shows heightened scrutiny of virtual currencies.
Regulators in the West—which is to say Europe, the U.K., the U.S., and Canada—have walked a tender line on cryptos. They have abstained from too much regulation. However, crypto prices are vulnerable to a sharp turn by these regulators, so we must remain vigilant.
Despite this bittersweet mix of Ethereum news, we maintain our $1,500 Ethereum price forecast for 2018. It remains very much within grasp.