Your next chance may be around the corner, definitely not under $1000, but at a price that’s still a steal compared to ETH's potential.

And it all boils down to the regulatory environment in the U.S.

The dark clouds of tightening regulatory and economic outlook in the U.S. may give us those entry points on ETH — but it will get worse before it gets better.

How do you stay calm through the coming storm?

Let's dive into some insights.

TLDR 📃

• U.S. regulatory challenges threaten Ethereum (ETH), particularly with a bill targeting DeFi activities and increased reporting requirements.
• Legal actions against crypto developers and exchanges folding under U.S. pressure add to Ethereum's woes.
• Whales are accumulating ETH in anticipation of regulatory and economic shifts, indicating potential opportunities in the market.
• Despite setbacks, we believe in Ethereum's long-term potential and see current challenges as opportunities to buy at a discount.

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Disclaimer: Not financial or investment advice. Any capital-related decisions you make are your full responsibility.

The U.S. is starting a war against DeFi ⚔️

Last week, the Biden administration introduced a bill that would make many DeFi activities illegal - unless platforms provide extreme amounts of reporting. The bill puts the Ethereum ecosystem in the crosshairs because it is the first home of DeFi.

The bill classifies DeFi platforms as brokers, just like centralised exchanges. It also requires DeFi platforms to report all the same information exchanges do. They’d have to collect total profits and losses and provide that info to users in reports they’d submit to the government. They’re decentralised; who’s going to create those reports?

The bill's content shows that the regulators supporting it have no understanding of crypto. The sweeping definitions could even classify Etherscan as a broker (since it can be used to interact with smart contracts). Wallet providers like MetaMask are also being targeted with new reporting requirements. 

And what’s it all for? $28 billion in estimated new taxes. But the bill is already in motion, and if it is passed, the DeFi sector in the U.S. will take a hit, and this will cascade all the way back to ETH – the bedrock of the DeFi economy. 

In the meantime, the situation just got uglier.

Prosecutors dole out hefty sentences - justified or otherwise ⚖️

It made sense when Nate Chastain, the ex-Opensea employee fired for insider trading, was formally charged. And the sentence? Three months in jail plus a $50,000 fine. 

This may be justice, and it also sends a message. Well, except that the broad strokes of “justice” seem to be more concerned about making a statement. Otherwise, how do we explain that the Tornado Cash developers have been charged with money laundering and sanctions violations? 

This is a terrible blow to the Ethereum ecosystem - the devs do not deserve such treatment. They created an open-source protocol that many contributed to and used for different reasons, including basic privacy. Sadly, the founders are being used as scapegoats.

Prosecutors are taking the gloves off, which could slow down crypto innovation on the U.S. side. 

But it gets worse…

Exchanges are folding under pressure from the U.S. 🏃

Bitstamp’s announcement last week that they’re halting ETH staking services for U.S. customers was unexpected. Yet, it is understandable because of the pressure the U.S. has been putting on exchanges.

Regulators hate staking. They’ve been applying the same pressure on Coinbase, but Coinbase’s legal team prefers to fight instead. Hopefully, Coinbase wins the round; otherwise, we may see more downward pressure when people in the U.S. can no longer participate in ETH staking activities. 

But what whales know that the rest of us don't 🐳

Whales know that regulatory and economic winds shift extremely rapidly and know when a shift has a silver lining. As a matter of fact, they often bet on such shifts. That’s partly why we started paying extra attention when whales bought up a whopping $94 million worth of ETH in the mini-crash down to $1600, seeing it as an excellent opportunity to accumulate at a discount.

The amount of open interest has been on a downtrend, too, indicating less volatility due to options and futures ahead. High open interest can cause large price swings, so seeing it calm down is a great reassurance. Many are likely opting to buy ETH directly instead of its derivatives.

Even OnlyFans has been accumulating ETH - yes, them. They’ve loaded up on $20 million in ETH so far. They might even be preparing to integrate ETH into the platform, driving suave users to use ETH as the true currency of the internet. They’ve probably noticed their creators making a massive bag** on friend.tech.

Price analysis 📊

ETH | Ethereum (1D Timeframe)

Following the recent market-wide dump, we remain patient for a recovery, and ETH just showed its first signs of one.

If you're not familiar with the RSI, we'll explain it simply for you:

The RSI (Relative Strength Index) is an indicator used to identify whether an asset is overbought or oversold. Looking at ETH's daily timeframe, we can see the indicator dropped under the value of 30 - this means the asset is OVERSOLD.

Not only that, but ETH's price is chilling above support at this very moment, which further increases the odds of a recovery. We expect prices to go up from here.

Cryptonary’s take 🧠

Crypto-natives are planning for the long term. We fully know ETH’s disruptive potential and regulators’ frantic responses can only cause minor setbacks. For the savvy, these setbacks create opportunities and discounts that wouldn’t otherwise exist. In a sense, we should be thanking them.

Whether your strategy is to DCA or buy the dips, the key is to remember that ETH hasn’t yet lived up to a fraction of its potential. As the Ethereum ecosystem continues to evolve, those who saw the potential - and acted on their conviction - will benefit the most from the upside. We’ll be right there with you.

As always, thanks for reading! 🙏

Cryptonary, out!