Ethereum price rises above $3.1K after unexpected regulatory victory.
The price of Ether (ETH) increased by 5.5% on May 17, reaching $3,100 for the first time in ten days. Analysts attributed the rally to a slowdown in demand for fixed-income instruments following stagnant US retail sales data in April. This data raised market expectations of possible interest rate cuts by the US Federal Reserve (Fed) to boost the economy.
Central bank expansionary measures are seen as aggressive in risk-averse markets, either through increased money supply or reduced borrowing costs for businesses and individuals. Gold reached $2,410, down 0.8% from its all-time high, as investors sought exposure to smaller assets, including cryptocurrencies.
The court decision boosted the confidence of Ether investors
Ether's rise was unpublished by the US Department of Justice (DOJ) on May 15. The indictment charges two individuals with wire fraud and money laundering using the Ethereum blockchain. The document states that “Ethereum is a decentralized blockchain…without the need for a trusted intermediary” and that “there is no central actor that governs the Ethereum network.”
Additionally, the court noted that Ethereum smart contracts enable transactions without a trusted intermediary. These statements boosted the confidence of Ether investors, especially after the US Securities and Exchange Commission on May 4 issued a notice to Robinhood trading platform Wales about suspected security breaches related to crypto listings and custodian operations.
According to Orlando Cosme, founder and CEO of Lexprude, such a ruling contradicts regulators' classification of ETH as a security “because there is no other management or entrepreneurial effort.” This analysis lifted the spirits of investors despite the lack of acceptance of US spot Ethereum exchange-traded funds (ETFs).
The U.S. SEC is expected to issue a final ruling on VanEyck's spot Ethereum ETF request on March 23, and Grayscale's ETHE fund conversion on June 18. Although analysts predicted less than a 35% chance of approval, the regulator's case for Ether was weakened by the safety device, which probably contributed to the May 17 rally above $3,050.
Solana founder Anatoly Yakovenko has praised the security of the Ethereum network, noting that it will be nearly impossible to coordinate an “improper state transfer or double-spend attack.” In a May 17 post, Yakovenko added that layer-2 scalability has reduced costs without compromising security due to the network's large number of verifiers and operators.
In short, investors realize that whatever obstacles Ethereum faces, including high transaction fees and its lack of efforts to increase scalability, are actually decisions that prioritize security and decentralization. Meanwhile, competitors Solana (SOL) and BNB Chain (BNB) have opted for solutions that allow for higher processing capacity, regardless of the advantage of increasing reliance on smaller components.
The supremacy of the Ethereum network remains undisputed
Ethereum's strength becomes clear when analyzing its dominance in the decentralized applications (DApps) movement. The growth of layer-2 solutions like Base, which is gaining traction thanks to its low fees and integration with the largest US crypto exchange Coinbase, further strengthens Ethereum's potential to become a global settlement layer.
Ethereum's $181.5 billion DAP volume in 30 days is more than seven times that of its direct competitor, BNB Chain. Most importantly, this amount is only down 3% compared to last month, with BNB Chain and Solana down 52% and 41% respectively.
Related: US Senate Passes Resolution Overturning SEC Crypto Rule Against Banks
Analyzing unique active addresses related to DApps (UAW) yields similar results, as Ethereum gains 3% in 30 days, while BNB Chain and Solana experience significant declines. Highlights from the Ethereum network include Balancer reporting a 34% increase in volume in 30 days, Morpho Optimizers, an 80% increase, and DODO with a 61% increase in volume.
Basically, even though the chances of U.S. spot Ethereum ETF approval remain low, investors are realizing that the network's dominance has no impact on the DApps ecosystem. This realization contributed to the ETH price gains on May 17.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
