On Monday, the price of Ether (ETH), the cryptocurrency that powers the smart-contract-enabled Ethereum blockchain, fell below $1,500 and reached the $1460s for the first time in nearly a month. The world’s second-largest cryptocurrency by market capitalization was down about 2.0 percent on the day at current levels in the $1,480s, with losses from earlier monthly highs in the $1,700s now exceeding 13%. Even though gains like these can be quickly recouped in crypto markets, that still leaves the cryptocurrency up about 25% year-over-year.
ETH is weighed down by regulatory concerns
Fears of aggressive US regulatory action continue to hurt the cryptocurrency market. Paxos Trust Co., a US-based issuer of BUSD stablecoins, is reportedly going to be sued by the US Securities and Exchange Commission (SEC) for violating investor protection laws by offering stablecoins as unregistered securities. Due to skepticism regarding how investors can have an “expectation of profit” when purchasing a stablecoin like BUSD, which is designed to be price stable, the move has received significant criticism from the crypto community.
This follows Kraken’s settlement with the Securities and Exchange Commission (SEC) and the termination of its crypto-staking program, which the SEC had also classified as an unregistered security. Ethereum network validators are experiencing uncertainty as a result of US regulatory action against staking services in the US since the switch to a proof-of-stake mechanism for the Ethereum blockchain in September 2022.
According to Jacob Blish, head of business development for the Decentralized Autonomous Organization (DAO) that was in charge of managing the Decentralized Finance (DeFi) protocol at Lido Finance, the SEC’s decision to crack down on staking could have undetermined effects on Decentralized Finance. The largest decentralized finance protocol that provides ETH liquid staking services is Lido Finance.
Coinbase executives, the largest US exchange with an ETH staking service, announced this past weekend that they would “happily defend” staking in US courts.
Ethereum Price Prediction – Where Next for ETH?
While regulatory concerns continue to dampen sentiment in the near term, a test of Ether’s 200-Day Moving Average (DMA) at $1,440 is a possibility if Ether finds support at its 50-Day Moving Average (DMA) around $1,470. Due to the close proximity of Tuesday’s crucial US Consumer Price Index (CPI) data for January, which will further inform the outlook for US Federal Reserve policy, traders may be reluctant to chase another big move lower on Monday.
A negative surprise could provide some respite for ETH and propel the cryptocurrency back into the $1,500 range. However, a fall to the subsequent major resistance area could be triggered by an upside surprise to consensus, which is already anticipating an MoM acceleration of price pressures. The December high, 100DMA, and an uptrend from November/December all reside around $1,350.
