Ethereum Extends Impressive Run, up 35% in 1 Week: Factors and Trends

In the past week, Ethereum, the second most valuable cryptocurrency in the global market, has experienced a strong upward movement, recording an additional three percent increase in value on the day.

Within seven days, the Ethereum price has increased from $117 to $159, by over 35 percent against the U.S. dollar, making it one of the best performing crypto assets throughout the past two months.

Can the Constantinople Fork Effect Continue to Fuel Ethereum?

Analysts have attributed the positive price movement of Ethereum to its upcoming Constantinople hard fork. The fork is set to decrease the block reward of Ethereum from 3 to 2, reducing the potential circulating supply of Ethereum in the long-term.

Major cryptocurrency exchanges have announced support for the hard fork which is expected to occur between January 14 to 18.

“We will support the Ethereum (ETH) Constantinople hard fork and will take a snapshot of all the OKEx accounts at the block height 7,080,000 (which is estimated to occur between Jan 14 – 18),” the OKEx team said on January 4.

With no contentious hard fork proposals on the horizon and the overwhelming majority of the community supporting Constantinople, the protocol change is likely to be completed with minimal network disruption and a short period of trading suspension on cryptocurrency trading platforms.

According to a cryptocurrency trader with an online alias “The Crypto Dog,” Ethereum is currently testing a major resistance level above the $160 mark.

In consideration of the performance of the asset throughout the past two weeks and the momentum fueled by the imminent Constantinople hard fork, Ethereum is expected to test important resistance levels with strength.

But, the trader said that despite the optimistic price movement of the asset, due to its 80 percent gain in the last three weeks, an entry in a high point could pose a risk to investors.

The trader said:

ETH facing serious resistance on the ratio pair here. It would be incredibly bullish if Ethereum could hold above 0.04 vs BTC. I am not looking for longs at this level. Hard fork shenanigans could certainly push this much, much higher, and ETH could possibly break up on this push, but to me an entry here is hard to justify. Just to be clear – I’m not bearish on ETH right now, the ETH / USD chart isn’t exactly showing ‘weakness.’

Crypto Market Still Volatile

In late December, the cryptocurrency market demonstrated signs of a potential recovery as Bitcoin climbed closer to the $4,000 level.

However, since January 3, digital assets have seen a decline of around $3 billion from their combined valuation and the asset class is not showing indicators of a rapid short-term bull run.

As traders anticipate the Constantinople hard fork, the Ethereum price could increase beyond the $160 mark but the rest of the cryptocurrency market has not been able to record high daily volumes nor a noticeable increase in trading activity following a stagnant week from Christmas to New Year.

Featured Image from Shutterstock. Price Charts from TradingView.

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Published at Fri, 04 Jan 2019 22:17:30 +0000

April 1, 2017

Japan’s New Bitcoin Law Could Do More Damage Than NY BitLicense

According to IndieSquare Co-founder Koji Higashi, new regulations in Japan, which will make bitcoin an official form of payment (starting today April 1), may do more harm than good for the fledgling industry in the country.

Japan to Introduce Own ‘Bitlicense’

Following the disastrous demise of the infamous Japanese exchange, Mt. Gox and the arrest of its CEO Mark Karpelès, regulators in the country decided to introduce regulations for bitcoin.

The regulatory framework has been in the works for over two years. The first bill was submitted to the Diet in Japan (the legislature consisting of the Lower and the Upper Houses) last March, and the Payment Services Act and the Act on Preventing of Transfer of Criminal Proceeds were amended in May 2016. Now, new drafts for detailed regulations and guidelines have been approved.

The new law, which is now in place starting today (April 1), is meant to protect consumers and to help them distinguish safe, i.e. approved exchanges, from fraudulent operations.

The law also recognizes approved cryptocurrencies as a legal method of payment in Japan, preventing users from investing in so-called scam coins, fake digital assets, and IOU tokens.

Although praised by western and Japanese media alike, the new regulatory framework may pose serious problems for the Japanese bitcoin community, according to Koji Higashi, Co-Founder of IndieSquare and Community Director at the Counterparty Foundation.

In a blog post, Higashi outlines the major issues with what he calls “Japan’s Bitlicense” due to the similarities found between the two, saying:

I’d actually argue that this law may turn out to be more damaging to the Japanese industry in the long run than what Bitlicense has been to NY.

Why It Could Be Worse Than NY’s

The Bitlicense introduced in New York has been widely perceived by the community as damaging for bitcoin startups in the region due to the bureaucracy and high entry barriers for small startups. It resulted in several startups like ShapeShift and LocalBitcoins halting services for NY-based customers.

Now, Japan is doing the same, explains Higashi. “If you are not a fan of the excessive cost for legal and compliance fee for bitcoin startups, however, the new law in Japan is certainly not exciting news for you,” he notes.

Among others, the requirements involve the submission of a 3-year business plan, segregated fund management, KYC/AML requirements, segregated fund management, frequent reporting to authority, and external audits.

Some experts estimate that the costs involved with becoming a compliant exchange could be as high as $300,000-$500,000 USD. Moreover, additional fees and paperwork will also apply to companies beyond trading platforms and will affect P2P decentralized exchanges as well.

Higashi:

It’s hard to say whether the regulation in Japan is more costly than the Bitlicense but I can say it’s expensive enough to put serious financial pressure on startups and may force them to go out of business completely in some cases.

Another issue with the new regulatory framework is that it will require virtual currencies to be accepted into an official list of approved coins. Although this system may protect users from being scammed out of their savings, it may end up damaging the reputation of coins that don’t make it to the list, which will most likely be a conservative one at best.

bitcoin in Japan

The new regulations may affect bitcoin startups negatively but are also likely to push adoption forward and to create a sense of trust for new users in the virtual currency space. Japan is the fastest growing country in the bitcoin market. For example, trading volume in Japan has recently surpassed that of China and the U.S.

The country is experiencing growing interest in bitcoin from users, investors, and merchants. Blockchain is also a technological focus point both for companies and the government. The Japanese community is also one of the biggest investors in crypto-related crowdfunding campaigns and Initial Coin Offerings, according to Higashi.

[Note: This article was originally published on February 9, 2017. It has been updated as today (April 1) is the first day Japan’s new cryptocurrency law comes into effect.]

Will the new regulations drive companies away from Japan? Or will it usher a new age for cryptocurrency adoption in the country?

Images courtesy of CryptoCompare, Shutterstock, Counterparty.io

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