With US inflation numbers hovering close to a 40-year high, the Fed is looking to taper its fiscal policies, potentially causing ETH to slide more.
- American Senator Elizabeth Warren recently referred to DeFi as the “most dangerous part of the cryptocurrency ecosystem”.
- Elon Musk’s support for DOGE as a superior payment alternative to BTC resulted in the memecoin gaining more than 15% value recently.
- Coinbase’s native wallet solution will soon allow investors to store NFTs.
Ethereum’s continued descent continues to worry investors, especially as the altcoin had exhibited a high degree of decoupling from Bitcoin over a 50-day period during October and November. As a result, the cryptocurrency is now showcasing fortnightly losses in excess of 17%. At press time, ETH is trading at a price point of AU$5,350.
The volatility seems to be spurred by the Federal Reserve’s decision to potentially taper its lax monetary policies that have been in effect for the better half of the last 2 years. In fact, with inflation figures currently hovering close to a 40-year high, it is expected that the Fed may take drastic measures to prevent the American economy from suffering further – something that may have caused ETH investors to panic sell over the last week or so.
Another reason for the slide could be the recent Senate Banking Committee meeting where senator Elizabeth Warren stated that the decentralised finance (DeFi) market – which is largely dominated by Ethereum at the moment – is the most dangerous part of the entire digital asset ecosystem, adding that if its expansion is not regulated, it could have a number of “systemic consequences” on traditional markets. She further opined:
“This is where the regulation is effectively absent and, no surprise, it’s where the scammers and the cheats and the swindlers mix among part-time investors and first-time crypto traders. In DeFi, someone can’t even tell if they’re dealing with a terrorist.”
That said, Cathie Wood, CEO of Ark Invest, believes that despite ETH’s current state of affairs, it is still extremely undervalued compared to Bitcoin, thanks in large part to its position as a clear leader within the DeFi and NFT markets.
Coinbase Wallet now supports NFTs
As per a recent announcement, American crypto exchange Coinbase’s native wallet solution will soon be providing its users with complete support for non-fungible tokens (NFTs), a move that could help spur the development of this fast-evolving space even further over the coming few months.
It is being estimated that cumulative NFT sales for the current year topped the US$17.7 billion mark, with peak sales being witnessed over the month of August at around US$1.6 billion.
Dogecoin rallies as Elon Musk expresses support of the memecoin
After being named Time magazine’s person of the year, Tesla CEO Elon Musk opined that DOGE may be better suited for everyday payments when compared to BTC, driving the price of the asset up by nearly 15% overnight. In a recent interview, he was quoted as saying:
“Bitcoin is not a good substitute for transactional currency. Even though it was created as a silly joke, Dogecoin is better suited for transactions. The total transaction flow that you do with Dogecoin… like transactions per day, has much higher potential than Bitcoin.”
With the altcoin market being on the receiving end of a lot of bearish pressure over the last couple of weeks, it will be interesting to see how things continue to play out for ETH from here on out.
Disclosure: The author owns a range of cryptocurrencies at the time of writing
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