Ethereum News Update
Ever since the dawn of cryptocurrencies, two things have been true: 1) Retail investors are excited about distributed ledgers/blockchain technology, and 2) Institutions are not.
Now that paradigm is changing.
You don’t have to go back very far to see what I’m talking about. At the end of 2017, Ethereum started a bullish rally that led prices up more than 336% in two months. Investors were incredibly optimistic about the future of ETH prices.
Meanwhile, the CEO of JPMorgan Chase & Co. (NYSE:JPM) called Bitcoin—and by relation, the rest of the cryptocurrency market—a “fraud.” Dimon also said that if any of his employees were “stupid” enough to trade cryptocurrencies, he would happily kick them to the curb.
Oh, how things have changed.
What we’re seeing today is an institutional infatuation with blockchain technology. Below are a few examples of how companies and governments are spending money to retrofit their operations with this emerging technology.
- Ford Motor Company (NYSE:F) filed a patent for a cryptocurrency that would help cars (presumably, driverless cars) interact on the road. For instance, someone in a rush could theoretically pay other cars to move into a slower lane, thus freeing up their commute. (Source: “Vehicle-to-vehicle cooperation to marshal traffic,” U.S. Patent Office, March 27, 2018.)
- Germany’s biggest stock exchange provider, the Deutsche Börse Group (ETR:DB1), is developing a new platform for securities lending on the “R3 Corda” blockchain. This is not a feel-good PR project that signals lukewarm interest in blockchain technology—it is real adoption. (Source: “Deutsche Börse Group and HQLAX partner to build securities lending solution on the R3 Corda blockchain platform,” Deutsche Börse, March 26, 2018.)
- A British charity with stewardship over national monuments might shift its donor collections onto a blockchain-based platform called “Giftcoin,” demonstrating that cryptocurrencies have positive societal implications as well. The move would help patrons track how their donations are spent. (Source: “UK Charity Taps Blockchain Platform to Boost Trust in Donations,” CoinDesk, March 26, 2018.)
Clearly, these institutions are earnest in their attempts to understand and implement blockchain technology. But investors, on the other hand, appear disillusioned and cynical about the future of blockchain.
The only evidence needed to prove the latter point is the cryptocurrency market cap, which has fallen from a peak of $828.1 billion to $300.0 billion. Need I say more?
Analyst Take
Investors and institutions have swapped opinions on blockchain technology. But what is one to do with this information?
Well, the first thing is to consider that institutions have the power to do something, whereas investors only have the power to speculate. So if we’re seeing more institutional involvement, it must mean things are happening on the ground.
Ethereum prices might not reflect this newfound reality, of course, but that’s only because investors are one step behind. In any case, I prefer the genuine progress of 2018 to the rabid optimism of 2017. It gives investors an opportunity to scoop up valuable assets at discounted prices, which is the “buy low” part of an old investing truism: “buy low, sell high.”
Our $1,500 Ethereum price forecast for Q2 remains unchanged.
Source: Price Confidential
