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Ethereum and the Importance of Anti-Hype

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Generally, the consensus among blockchain enthusiasts is that Ethereum will be the platform that powers Web 3.0. However, Ethereum’s developers, including its founder Vitalik Buterin, are characteristically muted when talking about their creation’s potential. Last week, one of Ethereum’s top developers even tweeted the following:

This frankness runs contrary to many others in the cryptocurrency space and is perhaps one of the reasons that Ethereum has performed well in recent weeks, as the wider market has been gripped by particularly volatile price swings.

Ripple

Over the Christmas period, the cryptocurrency world was gripped by Ripple’s extraordinary rise from around $0.2 in late November to highs in excess of $3 in early January. The financial institution-friendly cryptocurrency managed to overtake Ethereum’s market cap to reach a high of around $130bn on the news that it was the first cryptocurrency to receive institutional support and was on the cusp of widespread adoption. Indeed, Ripple’s CEO briefly became wealthier than Mark Zuckerberg based on the market value of the 50,000,000,000 XRP that he currently holds.

However, the hype died down and the reality that no banks have yet fully adopted the Ripple protocol soon set in. Ripple promptly tanked some 50% before recovering slightly, settling for a market cap of around $80bn and returning to the number three spot. The hype still lingers and many mainstream media outlets are still hailing Ripple the “new bitcoin”, thus showing their ignorance of its price movements and technological differences with the grandfather of cryptocurrencies. But the market has recognised the scale of hype around Ripple was not proportional to its adoption, and XRP has been punished for it (though it of course remains 1000% up from its price in November).

Ethereum’s Anti-Hype

Throughout Ripple’s brief time at the top, Ethereum’s developers maintained their usual modesty. They could have easily tweeted about the potential that their platform has or the fact that dozens of companies have joined the Enterprise Ethereum Alliance (oddly enough, JPMorgan is one of them, despite its CEO having an overwhelmingly negative view of blockchain).

In fact, on 27 December 2017, Buterin tweeted this:

Since that tweet, Ethereum’s price has steadily climbed from about $700 to nearly $1,400, despite the market stumbling on the news that South Korea might ban crypto trading. Evidently, the crypto market is moving away from one that relies solely on hype and that rather cloudy term, “potential”, into one that is rewarding developer activity above all else.

That, of course, will not stop speculators from contributing to the extraordinary price rises lower down the cryptocurrency food chain. New coins promising new features are cropping up at an extraordinary rate. While both hype and the so-called anti-hype that characterises the Ethereum Foundation contribute hugely to price movements, it is also important to recognise that huge price increases are also driven by the simple fact that since new coins and tokens are not backed by assets, they start at zero.

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Cryptocurrencies

Cryptos Rally Slightly

crypto prices

Following one of the worst crypto crashes since 2015, cryptocurrencies posted moderate recoveries.

Editor’s Remarks: Bitcoin dipped into four-figure territory at the nadir of the short-lived crash that many touted as the “end of cryptocurrencies”. However, most major currencies were up yesterday as they commenced a recovery. Ripple, which fell as low as $0.90, was up to $1.40 by midday, while NEO resumed its upward trend. Bitcoin’s recovery has been notably weaker than its smaller cousins, some of whom are up 60% in the last 24 hours against bitcoin. Ethereum gained back some of the ground it lost too and is settling in once more above the $1,000 mark.

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Cryptocurrencies

Crypto Carnage: Blood on the Dance Floor

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crypto crash

It is said that ‘Blue Monday’, typically the third Monday of January, is the most depressing day of the year. This has, undoubtedly, been the case for cryptocurrency owners worldwide; from Monday onwards, almost all of the world’s major cryptocurrencies have seen a drastic slump in their prices.

Having reached the $14,000 mark last week, Monday onwards marked a severe fall in Bitcoin’s value. On Wednesday, the dubbed ‘king of cryptocurrencies’ dropped to below $10,000 for the first time since the end of November, before making a small recovery on Thursday. It stands at $11,500 at the time of writing, but the day is still young.

And Bitcoin has only been leading the way. At this point last week, the price of Ethereum, the second most valuable cryptocurrency, was approximately $1,200; a slump on Monday saw it fall to a low of $800 on Wednesday before pushing through the $1,000 threshold again, and reaching $1,030 a day later.

Ripple’s XRP also followed suit; the cryptocurrency has almost halved in value over the past week – from around the $2 mark to a low of $1.20 on Tuesday. Since then, it has marginally recovered in price, to $1.48 at the time of writing.

Monero, IOTA and Cardano were also impacted – since Monday, they have declined in price by 35%, 22% and 21%, respectively. Litecoin now sits at $195, down from $240 at the beginning of the week.

The crash occurred at a time of optimism and hope for cryptocurrency owners. Just earlier this week, US money transfer company MoneyGram announced a partnership with Ripple in the aim of streamlining money transfers. Yesterday also marked the expiration of the first Bitcoin futures contract that had been listed by the CBOE.

Still, China’s offensive rhetoric against Bitcoin and other cryptocurrencies in the last seven days is likely to have stoked fears amongst investors, causing a major sell-off. The country confirmed earlier this week that it was seeking to further clamp down on its restrictions against virtual currencies by eliminating cryptocurrency trading.

It has also recently announced plans to further restrict Bitcoin mining within the country. Recent statements coming from Chinese governmental circles could go as far as to suggest that China wants to eliminate cryptocurrencies outright: the People’s Bank of China (PBoC) vice governor, Pan Gongsheng, purportedly encouraged the state to introduce a total ban on cryptocurrencies.

China is by no means the only country to have espoused hostility toward cryptocurrencies. Russia also partially echoed China’s scepticism – President Vladimir Putin noted this week that “in broad terms, legislative regulation will be definitely required in future”.

South Korea’s unreceptive stance toward digital coins – it was reported earlier this week that its finance minister, Kim Dong-yeon, had stated that the government would be introducing measures to clamp down on the “irrational” cryptocurrency investment rage – may have also played a part in driving prices down.

Still, for every bear, there seems to be a bull. Time shall tell whether increasing restrictions on cryptocurrencies from different governments will further impinge on their price, or if they will find a way to adapt to the new obstacles and prove all those championing them (and making millions in the process) right.

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Cryptocurrencies

UK Banks Shun Bitcoin

UK banks Bitcoin

No UK banks have partnered with cryptocurrency exchanges.

Editor’s Remarks: The lack of any relationships between UK banks and cryptocurrency exchanges means that UK investors currently have to move their money through a series of foreign exchange transactions and services before they can cash out their profits. As a result, they incur high fees and often the suspicion of their banks. This is contrary to many European banks, which have partnered with such exchanges. To an extent, this is because the UK retail banking sector is highly concentrated, whereas in Europe and the US the consumer has more options. The UK government is also due to release guidance on how cryptocurrency gains are to be taxed in the next few days.

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