I’ve often heard that wisdom is the rarest commodity on Earth, but I never fully grasped its meaning till yesterday. I was reading conflicting reports about Korea’s impending regulations—none of which is written in stone—and then ETH prices fell by double digits.
I was shocked. One report said that Korean authorities were contemplating a full-scale crypto trading ban, similar to what China implemented last year. Meanwhile, another report denied those rumors.
What’s going on?
Well, it appears as though Korea is divided on the subject of cryptos. The Ministry of Justice seems in favor of a full-scale ban, having admitted as much during a recent press conference. But the Ministry of Finance and the Blue House (Korea’s equivalent of the White House) are still undecided.
Normally, bureaucrats tend to fight indoors, far from the prying eyes of the public. But for some peculiar reason, Justice minister Park Sang-ki broke with that tradition on Wednesday, telling a news conference:
“There are great concerns regarding virtual currencies and the justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges.”
(Source: “South Korea plans to ban cryptocurrency trading, rattles market,” Reuters, January 10, 2018.)
This quote drove billions out of the market.
ETH prices fell 10.6% against the U.S. dollar, bringing the Ethereum to USD rate down to $1,207.05.
Daily Ethereum Chart
A few hours later, the Ministry of Finance and the Blue House clarified that no decision had been made on how to regulate cryptocurrencies. Banning crypto trading is only one of the options, they said.
But the damage was done. Haunted by the memory of China’s trading ban, investors fled the market in a panic. Things grew so bad that by this morning, 55,000 Koreans signed a petition asking the Blue House to stop legislating against cryptos.
It is chaos, utter chaos.
In the middle of all this panic, investors have lost sight of the bigger picture. After all, the current slump doesn’t erase the simple fact that ETH prices are still 21% higher than a week ago.
Furthermore, the lesson of China’s trading ban was not that prices crashed, but that they recovered within two months. And then they soared beyond all imagination!
People get tunnel vision about investing, particularly when extreme volatility is involved. But I recommend that investors scroll through price feeds for the last year if they want some perspective on the issue. Crypto prices always move in a lopsided tango—two steps forward, one step back—that leaves it further along.
As such, we maintain our $1,500 Ethereum price forecast for 2018.
Source: Price Confidential