The cryptocurrency market may have been positioned for another Ethereum price drop following the hard fork(s), but given the reduction in block creation time to roughly 14 seconds from 19, coupled with a lower difficulty level (a direct result of EIP-1234), means that miners have not been significantly impacted by the reduction in block reward from 3 ETH to 2 ETH. As such, expect more miners to increase their efforts and participation in the Ethereum network. Technically, $145 remains the key, short-term resistance level, and unless the aforementioned dynamics change, expect this level to be tested with more momentum in the coming week.

The bullish bias may also find some support from cryptocurrency news that an independent investment management company, Invesco, which has over $800 billion in assets under management, has announced the launch of the ‘world’s biggest blockchain-focused ETF.’ Trading will begin on the London Stock Exchange on Monday and the Invesco Elwood Global Blockchain ETF will initially invest in a portfolio of 48 companies, targeting companies with the potential to generate earnings from the blockchain (which includes, but isn’t limited to Apple, Intel, and Advanced Micro Devices). While the likes of Bitcoin and Ethereum are still missing from the list of constituents of this particular ETF, it does show that the growth of this new asset class will be far-reaching, especially among the already-established tech sector.

As a guide, MakerDAO, a decentralized autonomous organization that provides crypto collateralized loans, voted to raise interest rates from 1.5% to 3.5%. More-so, if Dai does not stabilize at $1.00, the interest rate will again be increased to 5.5%. The Maker crypto platform provides collateralized loans through a series of smart contracts, in other words, it allows users to leverage their ETH positions.

The principles and the rationale behind the move are similar to that of a traditional central bank. The stability fee (or the interest rate) is increased to encourage borrowers to repay their loans, thereby increasing the price of Dai. Alternatively, the fee is decreased to incentivize Ethereum holders to take out loans, thereby increasing the supply of the stablecoin. Even with the higher fee, don’t expect a rush to redeem ETH, especially not from accounts that used the facility to add to (leverage) their ETH position.

Note:

CBOE Bitcoin futures (XBT) will expire on 13.03.19

CME Bitcoin futures will expire on 29.03.19

Thank you for reading,

The BeQuant’s Analytics team