Week in review: Ethereum and Solana hit new highs, and the US approves a $1.2 trillion infrastructure plan

Ethereum hit a new all-time high above $4,600, Solana rose to fourth place in the overall cryptocurrency market cap ranking, the US House passed an infrastructure plan worth $1.2 trillion and other events of the week.

Ethereum price hits new all-time high above $4,600

On Wednesday, November 3, the prices of the second-largest cryptocurrency reached $4,639, setting a new all-time high.

At the time of writing, Ethereum was trading around $4,600. Market capitalization is $546 billion, according to CoinGecko.

Solana price hits all-time high above $250

On Friday, November 5, Solana (SOL) reached an all-time high of $250. The next day the asset’s price reached $259.

At the time of writing, Solana was trading around $253. The cryptocurrency ranked fourth in the overall market cap with a value of $77 billion.

US House approves infrastructure plan worth $1.2 trillion

The US House voted to pass an infrastructure plan worth $1.2 trillion without amendments in favor of crypto-industry interests.

The vote was 228 to 206. The document was sent to President Joe Biden for signature.

The executive director of Coin Center, Jerry Brito, said the fight isn’t over. He explained that cryptocurrency provisions take effect on January 1, 2024. According to Brito, the Senate will work on a second large spending bill into which an amendment could be included.

In the crypto community the document was criticized for its broad definition of “broker,” covering participants in the crypto industry. It would obligate miners, node operators, wallet developers, DeFi liquidity providers and other non-custodial players to report user transactions to the tax authorities.

Senators Ron Wyden, Cynthia Lummis and Pat Toomey proposed to exempt crypto-industry participants from the bipartisan plan. Their colleague Rob Portman put forward a counterproposal, exempting from tax reporting only miners and equipment or software sellers, leaving unclear the status of PoS validators.

On August 9, Democrats, Republicans and the Treasury reached a compromise, but the corresponding amendment did not receive unanimous support — opposed by 87-year-old Richard Shelby.

In the crypto community, there were concerns about another amendment to the infrastructure plan, which would require recipients of digital assets above $10,000 to verify the sender’s personal information.

Fed to wind down emergency stimulus program

The U.S. Federal Reserve (the Fed) will begin winding down the emergency stimulus program and will cut the pace of government bond purchases by $10 billion, and mortgage-backed securities by $5 billion.

In November the pace of purchases will fall from $120 billion to $105 billion, and in December — to $90 billion.

The Fed also kept the federal funds rate in a range of 0% to 0.25% per year.

The statement noted that the growth in economic activity and employment is influenced by the epidemiological situation and vaccination progress, which also help lower inflation.

The regulator plans to maintain accommodative monetary policy to achieve maximum employment and inflation at 2% in the long run.

U.S. Treasury publishes report on stablecoin risks

The U.S. Treasury released a report on risks associated with stablecoins. The department sees stablecoins as a threat to investors and market integrity, and calls for strict regulatory restrictions.

In terms of risks, it cites a “bank panic” and excessive opacity of reserves backing stablecoins.

The PWG prepared the report. Its members urged Congress to treat stablecoin issuers as depository institutions with deposit insurance, placing them on a par with banks. Organizations that do not meet such strict requirements would be prohibited from issuing stablecoins.

Supervision, according to the PWG, should be carried out both at the level of such an institution and at the level of the holding company that it belongs to.

The report calls for restrictions on the affiliation of issuers with other commercial entities (likely most relevant to the Bitfinex–Tether tandem).

Bitcoin mining difficulty rises by almost 8%

As a result of the latest recalculation, Bitcoin mining difficulty rose by 7.85% — to 21.66 trillion hashes (TH).

This marks the eighth consecutive increase since the crackdown on the industry in China. However, it has not yet returned to the May peak of 25.05T .

Against the backdrop of Chinese authorities’ crackdown, mining difficulty fell to mid-July. At the start of that same month it fell by a record 27.94% .

JPMorgan analysts called a fair price for Bitcoin $35,000. If Bitcoin volatility halves, the bank’s analysts consider a target of $73,000 justified.

JPMorgan also projected a 15% annual growth for digital assets in 2022, higher than real estate (12.5%), hedge funds (7.5%) and equities (5%).

According to the analysts, high volatility reduces the attractiveness of cryptocurrencies to investors. The bank believes digital currencies cannot be recommended as a core asset.

Goldman Sachs sees Ethereum rising to $8,000 by year-end

Ethereum price could rise to $8,000 by year-end if the historical correlation with inflation expectations holds. Bernard Rzymelka, managing director of global markets at Goldman Sachs, holds this view.

He cited the observed since-2019 correlation between inflation expectations on a two-year horizon and the Bloomberg Galaxy Crypto index. Ethereum’s weight in the latter is 40%, the same as Bitcoin’s. The remaining 20% goes to Litecoin, Bitcoin Cash and EOS.

Peter Thiel calls Bitcoin at $60,000 a sign of inflation

The high price of Bitcoin suggests the economy is facing real inflation. This view was expressed by PayPal co-founder Peter Thiel.

Speaking at the second Conference on National Conservatism, the billionaire argued that price increases are not temporary. He criticized the Fed for not fighting inflation and not understanding its seriousness.

“You know, Bitcoin is already at $60,000, and I’m not sure it should be bought aggressively. But this, undoubtedly, tells us we are in a crisis moment,” Thiel said.

According to him, the Fed does not even realize the problem and wrongly believes it can print money without negative consequences for price growth.

What else to read and watch

In October there was a trend toward meme tokens, as well as native metaverse and GameFi coins. Inflation expectations prompted investors to turn to the stocks of crypto companies.

This and more in the October industry review. All the most important crypto-market news of the month in one piece.

For ForkLog, managing partner of GMT Legal Andrey Tugarin and partner of NOA Circle Eduard Davydov analyzed the most significant changes in the FATF guidance for the crypto industry, which potentially pose risks for founders and developers of DeFi and NFT projects.

In traditional digests we have collected the main weekly events in the fields of cybersecurity and artificial intelligence.

The most important news from the venture-capital sector can be recalled with our “Institutional Ledger”.

Read ForkLog bitcoin news in our Telegram — cryptocurrency news, prices and analysis.