Price Preview January 11 - 17
Ethereum's bull run suffers 20% setback as volatility looks set to continue
ETH has suffered a 20% pullback after nearing all-time highs, leading to the usual round of “crypto crash” headlines that decorate every cycle. While there has been no obvious reason for the reversal, it’s not uncommon for cryptocurrency markets to shed double-digit losses during spells of dramatic growth, eventually moving higher after over-leveraged positions begin to close and long-term holder’s move to take a modest profit.
Kain Warwick from Sythnetix put it best in this thread from today, describing the typical cycle of a crypto bull market.
This latest downturn may well be a precursor to ETH blasting through its previous high of $1,420. That is, of course, if news from the New York Attorney General (NYAG) about their investigation into the world’s largest stablecoin, Tether, doesn’t throw any surprises on January 15th.
Tether, which has now issued nearly $24 billion USDT coins, is under fire for allegedly misusing funds to cover an $850 million loss at its sister company, Bitfinex. Unlike most other stablecoins, Tether has not been publicly audited and operates outside of the US, allowing them to scale to the size they have while competing coins like USDC have fallen behind with just $4 billion issued.
At this point, the existence of the assets backing Tether’s $24 billion USDT balance is firmly in doubt, despite claims from the company that each USDT is backed 1:1 by reserves. Shockingly, many ardent cryptocurrency supporters avoid pushing Tether on this issue, with podcaster, Peter McCormack throwing softball after softball in a recent interview with the stablecoin’s CTO and Bitfinex’ General Counsel. When Peter finally summoned the courage to apply just the slightest pressure, the Tether team fell apart in an extremely awkward and telling fashion (skip to 22:44).
Regardless of whether Tether should be given the “benefit of the doubt” (as many people do), without any transparency on their accounts and with Tether firmly entrenched in Ethereum’s burgeoning DeFi ecosystem, the systemic risk is hard to ignore. Perhaps January 15th will give us a little more clarity on how this might end.
In this preview we look at:
Layer 2 scaling solution, Optimism, to trial its mainnet on January 15th
Uniswap grants to launch with $3 million
Major regulatory milestone as US banks are greenlit for stablecoin use
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