Ethereum: What's Behind the Short-Term Weakness?
Ethereum drops toward $500, but what is causing the slide in this otherwise indispensable asset?
In 2018, Ethereum seems to have become indispensable. Bullish predictions from January saw the coin appreciating to $5,000 in the coming months. However, ETH continues to slide from the recent peaks around $1,300, and goes down even below $500. But what are the reasons behind this slide?
ETH continued to slide as the markets recovered a bit, losing about 2.7% in the past 24 hours to $526.68. The asset is down more than 24% in the past seven days, becoming the biggest loser in the CoinMarketCap top 10. The market cap dominance of Ethereum also slides while Bitcoin’s dominance is on the mend at around 44%.
ICO Projects Selling: Some ICO projects are sitting on a lot of Ethereum. There are cases in which the project itself has not touched the funds – as with Coindash, which still keeps the full wallets after the hacker returned the funds. There is also the more extreme case of the Polkadot ICO, which had its ETH locked away after the Parity multi-sig wallet tampering. But some projects, like EOS, have been seen shedding their ETH on the open market, depressing the price.
Funding for ICOs is Changing: With the spreading of airdrops, less and less investors are purchasing Ethereum just to get exposure to tokens. ICOs start relying on private placements, and distribute tokens for free. This, in turn, makes ETH less valuable. Additionally, other platforms are inviting ICOs and creating demand for the asset.
Getting Out of Fashion: Ethereum has boomed to incredible price levels, but it has always sank to temporary lows. Ethereum has always had an image problem when put against Bitcoin. And while the coin’s utility is unprecedented, and projects are coming along, periods of enthusiasm and hype are followed by periods of depression and questioning the asset. Ethereum is taken for granted, serving its utility purpose, but lacking the shine of Bitcoin.
Whale Manipulation: The recent price depression may be all-out manipulation to buy up more ETH. It is unknown when ETH would become a staking coin, but owning it at lower prices and in higher quantities may be an option. Added to the general bearish mood of the market, ETH may be set up for a further drop.
Natural Fluctuation: With a still relatively new asset and market, the ETH market price has seen previous panic-inducing movements and crashes. Afterwards, the price has recovered. So the recent weakness may be due to many factors, but this does not preclude another upward run. However, ETH should be approached with caution, allowing for further slides in the coming months, as well as fast drops on selling and no support levels.
Source: Read Full Article