Leading crypto analysts announced the critical date for this altcoin project, stating that it may leave the exchanges soon! What will be the latest situation for Ethereum, which is under the pressure of the regulators? Here are the details…
The big debate for Ethereum: Commodities or Securities?
Ethereum (ETH), known as the leading altcoin, has been under the target of regulatory institutions for a long time. On March 27, the Commodity Futures and Trading Commission (CFTC) filed a criminal complaint against Binance for failing to comply with federal law. The regulator also claimed in its lawsuit that Ethereum is a commodity. This comes weeks after the Securities and Exchange Commission shut down Kraken’s crypto-staking service, where ETH is labeled as securities.
The lack of regulatory clarity in the industry is attributed to conflicting views on whether leading altcoin Ethereum should be classified as a security or commodity. This isn’t the first time. Earlier this year, SEC Chairman Gary Gensler reiterated the same view with his agency, and the CFTC Chairman agreed that ETH is a commodity. By definition, a “security” is a financial asset or instrument that has value and can be bought, sold or traded. Examples of this are stocks, bonds, etc. can be given. A “Commodity”, on the other hand, is a physical good that is traded on exchanges and whose value is determined by supply and demand.
Considering that Ethereum uses staking as a core feature of being part of the network, it falls into the category of security rather than a commodity. Bitcoin, which shares a financial similarity with gold, is closer to being a commodity than a security. But if Ethereum is declared a “security”, it will have an impact on exchanges that plan to list it.
These platforms and exchanges are required to register with the SEC as a “securities” broker-dealer or delist ETH to prevent them from illegally selling securities. This is not only faced by centralized exchanges, but also decentralized exchanges such as SushiSwap. After this situation, the crypto money market may be deeply shaken.
$28 billion worth of ETH will be unlocked! The date is approaching
Analysts, on the other hand, noted a surge in open interest in Ethereum alongside the drop in the supply of ETH on exchanges. With that, Ethereum is poised to unlock 14 percent of its total supply in the first week of April 2023 after the Shanghai Hard Fork. The ETH token unlock is worth around $28 billion and follows the altcoin’s first major upgrade since the Merge update in 2022. The event is scheduled to take place in April 2023 and allows validators to withdraw their staked ETH from the Beacon Chain for the first time since then.
Analysts, citing their comments on Twitter, warned investors against a “sell the news” opportunism, expecting panic sellers and uncertain market participants to dump Ethereum holdings near the major event. The downside target for the altcoin is between $1,400 and $1,500 after a sell-off. Analyst Andrew Kang quotes:
Sometimes there will be a confluence between March and May
- Shanghai Fear/Panic sale
- Stocks reaching a local bottom
- Market less optimistic about soft landing/rate cuts
- Bottom line sales
If ETH is $1400-1500 at this point, a comfortable max would be long.
Ethereum can leave exchanges
The total supply of Ethereum on exchanges dropped to just 10.3 percent on March 27 as users shifted or staked their ETH to self-storage wallets. This is the lowest level of supply since the cryptocurrency was launched in 2015. The trust of ETH holders in these exchanges was not restored following the collapse of FTX, which is why the exchanges currently hold less than 12.5 million ETH ($25.4 billion).
Also, investor confidence in the asset is far from recovering as whale activity, which rose significantly on March 11 to a nine-month high, cools again.
The whales pulled out of the market suggest that there are no alarming prospects of price increase as ETH failed to rise above $1,800, a level that was last tested as support in June 2022.
Ethereum and Bitcoin rivalry
Galaxy CEO Mike Novogratz commented on the Ethereum and Bitcoin rivalry. The crypto commentator expressed his support for both cryptocurrencies and their huge community. Novogratz reminded users on Twitter that Bitcoin and Ethereum account for the majority of the wealth stored by market participants. The words of the famous name are as follows:
I don’t understand why so many crypto advocates like to suggest an either/or. Both BTC and ETH have huge communities that believe in their future and are willing to store some of their wealth within them.
On the other hand, Ethereum percent supply on stock exchanges reached its lowest level since 2015 at 10.31 percent. Based on data from crypto intelligence tracker Santiment, there is less ETH held in exchange reserves compared to the volume of altcoins moved into wallets.
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