Sellers continue to dominate the cryptocurrency market. At the beginning of the year, buyers made one unsuccessful attempt to push the ETH/USD rate up to the $3,500 area, but the momentum didn't last. The price quickly resumed its downward trajectory and once again approached the psychological support of $3,000.
Market participants keep analyzing the news backdrop, which, as before, supports further downside. Traders are still mulling over the comments made by the US Securities and Exchange Commission (SEC) Chairman Gary Gensler in an interview with CNBC.
In particular, Gensler evaded the question of whether Ethereum should be considered as a security, saying that the commission does not "give legal advice." He also confirmed the need for greater crypto regulation to protect investors.
Let us recall that the legal tussle between the SEC and Ripple continues, with Ripple maintaining that the XRP token is not a security and that the company didn't violate any federal securities laws when selling it.
Additional pressure on ETH came from tighter crypto regulation and licensing regime in Singapore. Earlier this week, the Monetary Authority of Singapore (MAS) prohibited advertising and promoting crypto trading promotion to the public and crypto ATMs.
Officials said that these new guidelines could help protect the citizens from rash trading and make sure that their decisions are more deliberate and less impulsive. All digital payment token service providers in Singapore, including banks, payment services, and crypto exchanges, must comply with the new requirements.
According to the Gemini crypto platform study, it's worth noting that Ethereum is the most popular cryptocurrency amongst Singapore investors.
Another negative factor for the entire cryptocurrency sector is the prospect of monetary policy tightening in the United States. At its December meeting, the Fed accelerated the reduction of its monthly bond purchases, intending to end them in March.
This decision was due to the regulator's concern over the rising inflation, which reached 7% in December - the highest in the past 40 years. According to forecasts, the first key interest rate hike in the US is expected in March.
If these expectations come true, the US dollar and Treasury yields are likely to have a very productive year. In such conditions, risky assets will face pressure due to the decline in investor interest and the associated outflow of funds. Of course, crypto assets will be no exception. Given the above, we recommend shorting ETH/USD with a target of $2000.