For two weeks now, today was the first time Ethereum against the US Dollar dropped lower than the $300 level, undergoing and testing the $280 support. According to data from Coinmarketcap, approx $6 billion of market cap were “lost” in 24 hours. This happened and followed after indicators were there for a recovery trend to come upon ETH/USD.
On another side of the industry, the PBoC (the People’s Bank of China) together with the Central Bank reported the decision-making phase towards ICOs has come and their regulation. According to the source, the safety-strategy will be putting borders around ICOs, taking notice and supervising tokens and publishing investment risk alerts. In the event of a market risk, the plan concludes with a high-chance of denying and suspending all Initial Coin Offerings.
Movements and actions that will be taken related to ICOs will be based on an executive order formed in 1998 by State Council:
“Illegal financial business activities include: fund-raising targeting not specific objects without legal approval, or other activities that the People’s Bank of China identified as illegal.”
Today, in the morning as reported and announced by global-scale famous news platforms – the PBoC has decided to ban and declare illegal ICOs and initiate a state range investigation.
However, many see this as a positive strike for the market as for the longer-term understanding related to Chinese ICO market as it could be the first step to regulating the particular market.
Zennon Kapron – Shanghai-based fintech consultancy Kapronasia Director, is one of the analysts that concludes in an optimistic feeling about the recent PBoC actions:
“Regulators globally are struggling to understand what ICOs are, what the risks are, and how to ring-fence and regulate them. China, in many ways, is no different than the U.S. or Singapore in saying, ok, we need to push back on these for now until we figure out how to deal with them… I think it will be slightly a temporary measure.”
Keeping in mind that the Initial Coin Offerings (ICOs) could be one of the major and largest Ethereum use cases and market demand since it launched. That is why any negative regulation or action on ICOs by GOV bodies that have a dominating market like China has, could be resulting with descending in price for Ethereum in general.
This is just another factor for the major correction which is to be acknowledged by the community and traders/investors that followed that significant upward rocketing of the whole market for a few weeks in a row.
But for hoisting up optimistic thoughts on the mid-term market predictions, do not forget about the Ethereum network development that are upcoming and are of great importance. The Metropolis hard fork effort by the Ethereum Foundation, the much anticipated Plasma solution which is co-authored by Vitalik Buterin and Lightning Network developer Joseph Poon.