Bitcoin isn’t the only cryptocurrency that is currently suffering these days. In fact, altcoins especially Ethereum is also suffering lately. It is worth mentioning that Ethereum dropped by 14% overnight while other cryptos such as Bitcoin, Ripple, and Bitcoin Cash fell but only within 2 to 6 percent range. Why the massive drop in just one day?
The price of Ether dropped from $574 to $492. There is a possibility that the drop was caused by ICOs and other blockchain projects dumping ETH on Bitfinex. According to WhalePanda, it raised a valid question saying: “Wondering who just rage dumped ETH on Bitfinex. Didn’t EOS still have a lot of ETH and they were using Finex before”.
ICOs and Tokens
Christian Crowley, who is a business analyst for Ethereum analytics firm Alethio, mentioned that an average of around 100,000 new users join the Ethereum ecosystem on a daily basis. In addition to this, Ethereum processes around one million transactions daily. This was during Crowley’s speech at the Consensys Community Day that aimed to promote Ethereum development in Israel. He mentioned that there are around 29.2 million unique Ethereum addresses at the moment.
Also, it is worth mentioning that there are 1,090 decentralized applications and 700 tokens deployed within the Ethereum network in 2017. And since ICOs need to liquidate ethereum that they have raised, this could be one of the contributing reasons for the massive drop.
Market is Generally Bearish
It isn’t surprising that Ethereum is down as of the moment. In fact, Bitcoin is only trading at around $7,200. Many have associated this drop to the fact that there is no regulatory clarity when it comes to the market. And as a result, many institutional investors are still hesitant to enter the market. Also, there is a move by regulators to toughen up the rules and regulations in order to prevent scams.
But is the market ready for the entry of institutional investors such as Goldman Sachs? Russian Central Bank’s Deputy Governor recently questioned the potential benefits of blockchain technology saying that “technology for the sake of technology is pointless”. In addition to this, the Russian Central Bank Deputy Governor also mentioned that blockchain is not yet mature enough for the implementation on a much larger scale.
China Academy of Information and Communications Technology also released a report saying that only 8% of blockchain projects ever launched are still alive. And in addition to this, the average lifespan of blockchain projects is only at 15 months. Now, this can be alarming. In a separate study, it has been discovered that around 20% of ICOs are considered scams.
Considering the bearish market, analyst such as Willy Woo, who is known to be using quantitative data mentioned that considering various indicators, Bitcoin price is most likely going to dip below $6,000. However, he also mentioned that investors can expect a rebound sharply after getting to $5,700.
Should you be buying more cryptos at this point considering the possibility that institutional investors are going to participate in the market soon?