The Ethereum price is having a hard time resuming bullish momentum after a fantastic start to the year 2023. Yesterday, the price seemed to struggle with UK lawmakers, who claimed that investing in crypto in the same folder belongs to gambling in the casino.
What is going on around Ethereum that is currently out of whack?
Legal classification of Ethereum
In the United States in particular, the discussion currently seems to be heating up as to whether Ethereum may qualify as a security for US financial legislation. It seems more and more that US lawmakers are choosing to act against the crypto ecosystem and that could work against Ethereum.
Funnily enough, there is still no clarity about Ethereum between lawmakers in the United States. For example, the Commodity Futures Trading Commission (CFTC) believes that Ethereum qualifies as a type of digital commodity, rather than a security.
The opinion of the Securities and Exchange Commission (SEC) currently seems more that Ethereum qualifies as a security for US law. If the SEC pushes ahead with this and manages to qualify Ethereum as a security, it could have major consequences.
Then all centralized exchange platforms would be forced to remove Ethereum from their platform for all US customers. That would massively shrink the market for Ethereum and probably completely remove the confidence behind the project.
Total Value Locked (TVL) thunders down
Another bad signal for the project is that the so-called Total Value Locked (TVL), the number of Ethereum contained in smart contracts for DeFi applications has fallen sharply. Including the strike services of Lido Finance, which is the largest party in this field, are there only 15 million Ethers in the smart contracts.
In that respect, it really seems that the hype around DeFi applications and other things that require smart contracts is currently declining.
On the other hand, we must remember that we are coming out of a horrific bear market that lasted a long time. In that respect, it is not at all surprising that interest in Ethereum and the rest of the market has fallen somewhat.
The big question is whether Ethereum has what it has been doing for the past almost 8 years in the coming years. That was spectacular.