This article was excerpted from Tom Yeung’s Moonshot Investor newsletter. To make sure you don’t miss any of Tom’s 100x potential picks, sign up for his mailing list here.
#ETHGate is breaking the internet
On Wednesday, the Fed’s hawkish news sent both the stock and cryptocurrency markets up. The cryptocurrency market will immediately lose $200 billion, while stocks will lose $1.4 trillion.
I’ve been warning investors since October that Federal Reserve Chairman Jerome Powell He was taking the piercing pot.
“As we enter the subsequent rounds of the cryptocurrency bullish trajectory, it is time for selective profit taking.”
But market volatility also masked another worrying trend:
Although the hashtag has been on social media since last year, the past several days have seen “ETHGate 2022” gain a lot of attention. With a market capitalization of $400 billion, Ethereum is now six times more valuable than Enron ever was.
today Moonshot investor It would be unusual. Instead of considering specific choices, we’ll take a look at this offbeat theory, and what it means for cryptocurrency investors.
1. What is #ETHGate?
“[Ethereum] One commenter on Twitter explained that the whales… may have created multiple fake identities and accounts, “to make it look like the Ethereum network and the ICO was really decentralized when in fact… it was manipulated to appear more decentralized.”
Meanwhile, other coins were shortened. In December 2020, the Securities and Exchange Commission filed a lawsuit against a parent of XRP Ripple Labs “To raise $1.3 billion by offering unregistered and ongoing digital assets.” That lawsuit is still ongoing.
2. Is #ETHGate real?
the theory Do Some advantages. Financial regulators are notoriously inconsistent when it comes to choosing Initial Coin Offerings (ICOs) to label “unregistered securities offerings.” profitable companies from Binance (CCC:BNB-USD) for Crypto.com (CCC:CRO-USD) is free to create central tokens such as BNB and CRO, while others such as Ripple are wall-mounted.
The rules are not consistent even among similar cryptocurrencies. Ripple competitor excellent (CCC:XLM-dollar) appears to have escaped the SEC’s wrath by registering as a nonprofit organization and publishing its source code. Those who have siblings may relate to how the younger always seem to get away with it all.
3. What does #ETHGate mean for Ethereum?
In the long run however, public anger can Turning the legislative tide. Congress introduced 35 cryptocurrency-focused notes in 2021, and anyone trading Ethereum is intimately familiar with the ridiculous fees the protocol can charge.
Those looking to buy $500 worth of Ethereum tokens or NFT can easily spend $120 or more on “GAS” fees… before losing another 3% to 4% on the slip. Tougher regulations will eventually turn big-cap cryptocurrencies into regulated assets.
4. What does #ETHGate mean for XRP?
The Securities and Exchange Commission (SEC) has struggled to make a strong case against XRP, especially given its previous classification of Bitcoin and Ether as “non-securities.” Since then, many SEC spokesmen have changed the face.
“I don’t want to be overly technical but… there is no procedure [the SEC] An SEC attorney said earlier last year:
The lack of enforcement action since then has led to a recovery in XRP, up 130% since last year.
Although #ETHGate will not directly affect the price of XRP, it highlights the uphill battle the SEC is now facing to prove wrongdoing by Ripple Labs.
5. What is Ethereum?
The protocol also supports 97% of the world’s NFTs, according to data from DappRadar.
Although ETH has fallen from the first position, it remains Moonshot Investor No. 3 choose for its relative usefulness and stability.
Click here to learn more about Ethereum.
What does #ETHGate mean for your wallet?
Ethereum-Gate is still a small movement on the fringes of social media. Many allegations swirled around early insider trading, when Ethereum was trading at less than $1.
But anger on social media is usually on the rise. And #ETHGate highlights some powerful causes of outrage.
My Powell-focused newsletter closed in October with a warning to investors:
“Those who anticipate 2021-style returns on Bitcoin next year should reconsider the possibilities. With inflation expectations rising, it is only a matter of time before the Fed ends the show.”
Now that lawmakers on Capitol Hill have turned their attention to cryptocurrencies, it is only a matter of time before lower quality coins see their day of reckoning as well.
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At the date of publication, Tom Yeung did not (directly or indirectly) hold any positions in the securities mentioned in this article.
Tom Yeung, CFA, is a registered investment advisor with a mission to make the investing world simple.