There are a lot of unexplained actions taking place in the crypto market this month. There is a witch hunt against Ethereum (ETH), the SEC suspended trade of two foreign ETFs, and a cloud of FUD settled over altcoins. All these actions are driving prices down in a concerted, almost directed way towards an obscure goal. Suddenly, there’s is a lot of negativity claiming that ETH failed because altcoins failed. In the meantime, the buying of crypto currencies continue indicated by the holding of the $6,200 support line.
This cannot be a coincidence since these events are occurring in quick succession. These movements coincide with the looming deadline for the SEC’s decision towards the CBOE ETF (September 30, 2018). And, all of this is also happening during a dip in the prices of crypto currencies. It is as if the market was being set as an opportunity for well-funded entities to acquire large positions at low price in case the SEC votes in favor of an ETF.
Last week, many news sources launched an assault on the Ethereum network claiming that the platform was in its last throes. Ethereum is the number two cryptocurrency by market cap and the foundation for the development of decentralized applications, including ICOs. However, despite being the cradle for innovation of many other projects, it is being dismissed as obsolete and critics predict a quick and costly demise. Even its founder Vitalik Buterin seems in line with the idea that Ethereum “sucks” and all current blockchains are inefficient in their current state.
However, Vitalik’s personal sentiment was the total opposite just two months ago, when he boasted that with Plasma (Cash) and Sharding, Ethereum could scale up to one million transactions per second (tps). In fact, a number of upgrades are already in development; these being Constantinople, Casper, Sharding, and Plasma. These improvements will reduce inflation, increase speed, reduce storage and fees, and make the network overall more efficient.
So, if Ethereum is looking to improve and maintain its position as the leading platform, why are Ethereum’s capabilities in question now? Why is everyone turning its back on it now after years of praises? No clear explanation exists to this question but many rumors abound. For example, some say that ICOs have failed to deliver on their promises, hence, their failure is passed on to the network that hosts them. Others claim that venture capitalists are cutting their losses and exiting their positions.
The most popular reason is that Ethereum is becoming obsolete; but this explanation only came to be after ETH announced it was upgrading. Regardless of the rumors, the reality is that Ethereum is the only functional platform with a working product. And the price does not reflect its potential or future capabilities. Ethereum is facing many network capacity problems, which it will solve in time. Therefore, the lingering question remains, what is really going on? Once again, the answers to these questions correlate with other events.
Swedish Bitcoin ETFs
Yesterday, the SEC temporarily suspended the trading of two Swedish ETFs (Bitcoin Tracker One (OTC: CXBTF) and Ether Tracker One (CETHF)) in US markets. These are foreign debt instruments traded in a U.S. stock exchange but accessed only through retail brokers. Though their daily trading volume is low (approximately 33,000 shares or $1 million), they represent a way into crypto ETFs not yet allowed in the US by the SEC.
The reason given by the SEC is that “there is a lack of current, consistent and accurate information concerning” the funds. In other words, investors can confuse these ETFS with Exchange Traded Notes (ETN). This is a very subjective reason since there the two products have clear, basic differences. ETFs represent a stake, a share into a fund that holds the assets it tracks, while ETNs are like bonds; where a debt note is issued on an asset. This makes this action suspect as whether this decision is plays a role in a larger, conspiracy taking shape behind the scenes.
A careful examination of these incidents lead to two possible alternatives; either the market is indeed in decline, or special interests are planning the opposite. It is entirely possible that investment funds, banks, and exchanges, are using ETH as a scapegoat to drive prices down so all of them can buy in. Prices are being artificially driven down so that banks can buy at the lowest possible levels. This would explain why the prices can’t seem to break below $6,000. Entities, not individuals, are quietly buying, accumulating in preparation for the almost assured ETF approval and launch. The sell off created by FUD is countered by steady but discrete purchasing. This maintains price levels without creating a spike in price.
The evidence also points to one conclusion; the SEC may have a part to play in all of this. By suspending the Swedish ETFs, the SEC is eliminating the competition. It is paving the way for American banks to prepare a fully developed ETF infrastructure. For instance, Bank of America, Coinbase, and Citigroup are entering the custody market by launching their own ETF custody funds. However, these parties are not ready yet, so the SEC will postpone approval until all financial entities are set.
The government will bide its time until all the pieces are in position: Custody, warehousing, storage, clearing houses, insurance, trading, American Depository Receipts (ADRs), and leverage. Once these agents achieve their goal, the SEC will approve an ETF; at which time Wall Street will gain custody. And the majority of Bitcoins will be owned and stored on American banks. After this, the market will rise and reach the desired levels thanks to all the hard work seen now in current preparations.