Ethereum’s price is now sitting at US$2,700, up 57% from its 30-day low of US$1,722.05, with Ether seemingly spurred on by traders’ anticipation of the impact of the London upgrade — now just hours away.
Along with Ethereum’s imminent hard fork and the implementation of EIP 1559, two other factors fueling Ether’s price rise may be coming from Google’s reversal of its U.S. crypto advertising policy as well as greater regulatory clarity coming out of the U.S. — Ethereum’s biggest market.
From July 22 to August 2, Ether’s price notched a 12-day winning streak — Ethereum’s longest consecutive bull run in its six-year history. After the astonishing run where the price peaked at US$2,764.44, Ether cooled off slightly on Aug. 3 and 4, providing traders with a dip under US$2,500 before rebounding 8% to retest the US$2,700 level today.
What can we make of Ethereum — which aspires to be the “world’s computer” and whose native cryptocurrency is the second most popular — as the London Upgrade looms and Google reverses its ad crypto policy? Is Ether on the verge of breaking the US$3,000 level?
Is Google’s crypto ad policy the chicken or the egg?
One positive for Ethereum’s price could be Google’s recently revised U.S.policies regarding crypto advertisements.
Back in March, Google imposed an overarching ban on almost every crypto product — initial coin offerings, exchanges and wallets.
But as of this week, starting Aug. 3, companies offering cryptocurrency exchanges and wallets targeting the United States market are now permitted to advertise crypto products and services on Google providing they apply for Google certification.
Although Google’s new policy still comes with much stricter requirements on firms hoping to participate, such as being registered with FinCEN as a Money Services Business or a federal or state banking entity — Google allowing crypto companies to advertise on their site can only be seen as a win for the cryptocurrency sector, analysts say.
“Anybody who’s been in the space for a while would know that Google has gone back and forth on that issue with allowing crypto ads and then restricting them. So I’m taking it with a grain of salt,” said Justin d’Anethan, head of global exchange sales for Eqonex, a digital assets firm, in an interview with Forkast.News. “But it definitely sends a signal, which is that there is mainstream interest — whether it’s from retail or more corporate participants — for crypto, and Google wants to get a part of that and at least enable some of the participants to advertise for it.”
Since Google’s policy came into effect yesterday, many of crypto’s main market segments such as Bitcoin, Ethereum, and Cardano have all experienced price increases, with BTC rising up to once again test the US$40,000 resistance level and ADA also up to US$1.40 — or an immediate increase of around 5% for each. Ether rose 8% in the aftermath as well.
However, while d’Anethan says Google’s reversal on the ad ban is a positive, he believes the crypto price gains could be seen as “a bit of a chicken and egg situation,” which makes it difficult to deduce the direct catalyst for the market’s upswing.
Meanwhile, Jeremy Britton, CFO of BostonTrading.co — a diversified crypto trading ETF — only views Google’s decision as a “teensy step in the right direction” that actually does little to help promote valuable cryptocurrency projects.
“The new Google policy opens the door a sliver, and it seems they will only allow advertising by mainstream exchanges, for example Binance, Coinspot, BitMEX, etc, and those who provide wallets like Eidoo and Coinbase,” Britton told Forkast.News in an email. “The new regulations seem to disallow the advertising of legitimate cryptocurrency projects, which have multiple years of track record but allows any exchange to promote itself. This would be similar to Google allowing advertising to an exchange such as RobinHood, whilst denying advertising rights to Microsoft, Tesla, or Apple!”
London Upgrade could also boost Layer-2 coins
Ethereum holders are just hours away from the London hard fork upgrade, which is perhaps the most likely catalyst for Ether’s recent price surge and will be Ethereum’s biggest technical event of the year. The planned hard fork will implement the controversial EIP-1559, which will make three significant changes to the smart-contract blockchain.
Ethereum’s London upgrade will significantly alter the way its transactions are processed, how miners are compensated and the supply of Ether tokens. The upgrade will introduce Ethereum Improvement Proposal (EIP) 1559 which will provide clear pricing on user transaction fees to be paid that are then ”burned” — or the intentional destruction of tokens — to reduce the supply of ETH.
“The fees collected from the Ethereum users actually consist of two components. There’s the base fee and a tip, after the London update the base fee will actually be burned. And for the first time Ethereum will have a mechanism to take ETH out of the supply and reduce the rate of growth of the supply of ETH overall in the market,” said Alan Chiu, CEO at Enya.ai, which provides layer 2 scaling services for Ethereum, in an interview with Forkast.News. “Some are speculating that this will lead to an increase in the price of Ether itself.”
Eqonex’s d’Anethan believes that Ethereum’s recent hot streak has been primarily driven by the London upgrade narrative and could continue to drive Ether’s price higher in the days to come.
“When traders see a crypto being so well-supported, people are going to go for the clearer trade or the one that’s going to give them the best returns, and yesterday on the session, it seemed to be the case for Ethereum,” D’Anethan said. “It rose 8% while Bitcoin rose 4%, so Ethereum was definitely the outperformer.”
While Ethereum’s price rose by 16% this week, many of the blockchain’s layer-2 protocol tokens have also seen the positive effects from the looming London upgrade. Polkadot (DOT), Chainlink (LINK) and Uniswap (UNI) have all posted impressive gains over the last seven days of 27.70%, 25.54% and 20.77% respectively.
“The interesting thing to remember with the London upgrade is while it’s impactful for Ethereum, It’s also impactful for all the layer-2 solutions and all the coins living on top of the Ethereum blockchain,” d’Anethan said. “If the Ethereum blockchain does better and is more scalable or cheaper, it’s definitely very helpful for all the other solutions built on top of it.”
Regulations become clearer
While crypto regulation is often seen by many in the nascent crypto industry as a hindrance to growth and progress, the reality is that with regulation comes certainty that is conducive for business planning and legitimacy that could encourage mainstream investors to get more involved in cryptocurrency. With the recent calls by U.S. Securities and Exchange Commissioner Gary Gensler for greater regulatory oversight and the inclusion of crypto taxation in the U.S. Senate’s bipartisan infrastructure bill — crypto prices may in fact be rising on the sector’s promise of enhanced legitimacy.
Since Gensler’s appointment, the entire crypto industry has been trying to figure out where the new U.S. Securities and Exchange Commission chair stands on cryptocurrency and blockchain regulation.
A former chair of the Commodity Futures Trading Commission who also taught coursework on blockchain at the Massachusetts Institute of Technology, many had hoped that Gensler would take a hands-off oversight to the industry and influence other policymakers who have struggled with regulating the US$1.6 trillion crypto market. However, it has become clear that Gensler wants more robust oversight and investor protection.
At the recent Aspen Security Forum, Gensler called on Congress to give the SEC more power to regulate the industry. The SEC chair said many of the tokens in the market were unregistered securities, leaving prices open to manipulation and investors vulnerable to risks. Gensler also said he agreed with his predecessor, Jay Clayton, who said in 2018: “Every [initial coin offering] I’ve seen is a security.” Among Gensler’s requests were the power for his agency to oversee crypto exchanges, which are currently outside the SEC’s remit, and increased oversight of crypto lending and decentralized finance.
Despite crypto taxation being included as a provision in the US$1 trillion infrastructure bill, it also could serve to enhance the image of the industry and its participants as taxpayers rather than as money launderers and tax cheats. The crypto provisions may indicate Washington’s acceptance that the industry is here to stay, and that government and regulators now view the sector as a legal one from which federal tax revenue can be raised.
Tanya Xu, who leads sales and business development at the Celsius Network — a blockchain-integrated fintech platform — believes that the increased regulatory focus is good for the industry and may have been a catalyst for Google’s reversal of its crypto ad ban
“The U.S. has become more focused on crypto from a regulatory standpoint, and the clearer guidelines have probably allowed Google to feel more comfortable about allowing some activity by advertisers, on their platform,” said Xu in an interview with Forkast.News. “It will be interesting to see if other countries then follow suit and if other platform also start to be more lenient with crypto players.”
While regulation may be a slow and arduous process, crypto traders should once again take comfort that regulation is a sign of maturity and legitimacy.
Lachlan Keller contributed to this article.