The ethereum price has been falling over the last few weeks and I wholeheartedly believe this is because of the amount of ICOs that were and are still going on. There were projects that everyone wanted to be a part without any caps so hundreds of millions in Eth were raised overall. While this did create a bit of a pump because people were buying eth to get into ICOs and many eth getting removed from the market, I believe now we are seeing what happens when these ICOs actually are starting development.
Many of the companies that raised on the ICO round are not going to wait until the price goes down before they sell a large amount to fund their projects. If they raise 20 million, they want to work with 20 million and use that runway for as long as they can. For newer companies, it isn’t worth the risk to hold on and hope the price goes up in the long term. We saw the same thing in bitcoin when people were raising money for new projects as well. You also face backlash if you hold on long term and the price goes far down and you only get a little bit of development done.
Some companies did make a community promise that they were going to hold their funds for x amount of time, but I also believe this promise would be broken if the price falls far enough. The reason why I didn’t like ICOs is they pull way too much money out of the market and essentially create a ticking time bomb of coins ready to be liquidated. Companies arent going to say “hey lets just wait for a rise”, they are going to liquidate it as fast as they can. In addition if other ICOs see the other companies liquidating, they will do the same, creating a kind of race to the bottom.
All this does is hurt the Eth price over a long term period. The ICOs that were running should have capped out the amount of coins they would accept and that way you could limit the amount of money that would have to be eaten up in order to keep the price stable. Eth still has a lot of demand which is very good and should help blot the amount of coins being sold. However, in my opinion I see it getting worse before it starts getting better. All you essentially need is a 20% drop in a day and ICOs will start unloading like crazy.
This by no means is the death of Ethereum like many are saying, it just means for a while there will be a bit of a push back on price. Much of the success of Eth now also should be on how many of the companies actually produce products of value. ICOs are a big use case for Ethereum, not the only one, but an important one nonetheless. If all of the projects that raised millions fail, it might show that perhaps ICOs aren’t the most efficient way of raising money. Only time will tell and I could be wrong, but I personally think we might see a price correction in the short/medium term.
Thanks to @Elyaque for the badges
If ETH dies, it won't be because ICO's killed it.
I take issue with its lack of issuance cap, the fact that its daily mining output is prodigious, the hand-waving explanations about storage of the rapidly-inflating blockchain, and generally the other "oopsies" along the way.
Such as the "Status" ICO bringing the ETH network to a crawling halt. That isn't something that instills long-term confidence. I know people that are trading ETH for a quick buck, and I understand that - its pretty volatile due to its low notional value.
But longer-term there are some pretty tough challenges that ETH will have to survive to be a "competitor" in any sense of the word. I'm also tired of the reckless abandon that every ETH supporter radiates. Its in the form usually of enshrining Vitalik Buterin as the second coming of ... whoever... and creating a cult of personality around someone who is just an average dude who can code.
But I suppose all of those shortcomings will be more apparent as time goes on. ETH is currently digging a salt-mine under its English Basement apartment, and we still don't know how far it will fall.
ICOs are the current main purpose of Ethereum. Also looking at the price weekly is stupid. No serious investor looks at weekly price movements. What matters is quarters, which usually are periods of 3 or 6 months.
Ethereum is way up from where it was 3 months ago or 6 months ago so no one can say it's dying. There are more projects in development and actual utility for the Ethereum network grows daily. The biggest issue for Ethereum is going to be scalability which by it's design might actually be an impossible problem to solve. Sharding doesn't even work in theory and proof of stake only buys some time.
You must be a newbie trader, because every professional I know uses multiple timeframes for their investment decisions.
You do realize, of course, that weekly data is simply a condensed version of daily data? It makes no sense that you'd disregard a given timeframe. Unless you are focused on the pump-and-dump short term -- which is a trap a lot of new traders fall into.
You also forget I began my post with "IF", which is a logical conditional statement. If you think I said Ethereum is dying - as a fact, then you haven't read what I wrote closely enough to tell the difference.
This is what I meant about ETH supporters. They are so focused on the get-rich aspect of trading that they ignore anything long term that conflicts with their views.
Sad....
Has a lot of reason in it but I think that it will reach a ceiling before it flies it will lose its value, now what is happening is a market action
Interesting article. I was about to post a similair thread. The current total market cap of all cryptos might seem high but blockchain is here to stay and will involve all our lives. I do see a bright future for everyone that's hold's their coins with a long term vision. I was wondering if anyone of you uses: https://www.coincheckup.com This site did all the research for you. It's truly amazing. On: https://www.coincheckup.com/coins/Ethereum#analysis For a complete Ethereum Detailed report.
This is a very level headed, and probably correct, explanation for the drop in price. It's wise to be careful with all these new ICOs.. it's so easy for them to raise millions with just a white paper and website, and once they have your money, why wouldn't they just cash out?
I totally agree with @calaber24p and you
Raise as much money as you can while you can to develop what you can as soon as you can. Raising as much as possible now is the only way to stay away from regulatory repression and political suppression which is sure to come in the coming months as Ethereum begins to become truly useful.
That is the optimistic point of view on ICOs. Hopefully this is true for more of them than I think!
The price is down quite a bit from the top. I feel for those who bought in close to the top they must be hurting bad. Especially people investing in a big market cap coin expecting more stability in price, I guess it's not always the case.
It'll get worse before it gets better. I got in some ETH stink bids.
Absolutely. I agree with you, I also think the market is bearish and will test support levels. In fact, i recommend making money out of the market in a different way: https://steemit.com/bitcoin/@crypto-insider/bitcoin-will-collapse-this-july-make-money-out-of-it-usdusdusd
Great article @calaber24p. Ethereum will continue to be volitile like all crypto and an uncomfortable retrace is expected; it will come back in the next bull market, be ready!
Bicoin & Ethereum is the competitor, if bitcoin effects its more chance for ETHERIUM to effect..so, if both effects than the whole market effects..They dominance the whole market..
If ico taking place or imbalance in low cryptos, it reflects the price Action to bitcion & Ethereum
..
Check my Account for Daily Technical Analysis on top 10 cryptos
Bitcoin doesn't compete with Ethereum. Ethereum is in it's own lane.
Hands off Crystal-ETH
Thanks for the information, success is always for you, and this is very interesting writing.
I agree Im getting sick of all the useless ICOs it no different than all of the other useless altcoins that will never amount to anything people should stop supporting them as it will only dilute the BTC and ETH of this world...
Then why don't you make a useful ICO or stop investing in useless ICOs? Otherwise fund what you can however you can to develop whatever you want as soon as possible. The market demands the developers which cost a lot. So the ICOs must raise a lot to pay for the expensive cost of developing decentralized solutions.
Well I don't believe this to be death of Ethereum like you've said. People simply tend to panic a lot when these kinds of things happen to cryptos.
Je te remercie pour l'information tu es formidable.
Merci
Cordialement
So that is why ETH price is free falling, I bought ETH a month ago and sold it as soon as I can. Thankfully I did not get hit that hard on that investment.
Ha, you bought only a month ago and sold already? I expect you to be buying again on the run up to $1000 so why didn't you just hold and spare yourself the tax burden?
From a tax perspective day trading makes no sense at all when you can hold every token for at least a year.
Interesting article. I always thought that ETH would go up with the greater use through the ICOs.
Hopefully there will be a comeback, because it's down almost 50% from the high a month ago!
I think alot of people are participating in these ICOs hoping for a 7000% ROI without considering how little they understand what the companies are trying to do and if/how their roadmap makes sense. I have to warn all of you that until the big players in finance and the corporate world come in and accept whatever software that is being created, your ETH might as well stay in your pocket and be allowed to grow. Your best bet with ETH is to let it sit and wait for PoS so you can get interest on your ETH plus watch the value rise when the currency is capped out.
Interesting view.
Well written post and I believe you could be right, but we'll jist have to wait and wonder what happens. Still owning some ether and will leave there for the long term... Hoping for a spike somewhere in the next 6 months or so..
It's a little messy for sure. Some of the ICO's will come to fruition and work on Ethereum so will end up helping Ethereum.......but when does this constant "best ever FOMO ICO this week" ever end? @waykiwayki
That's why is so important to research those ICO and all the people behind them instead of throwing money at them because of the hype and "news"
I wouldn't hold ETH for a few months, until we have a clear schedule for when better scaling will be implemented and if it's a significant improvement.
We're starting to see some recovery but we'll be seeing more of these any time soon.
Can you show us an strong correlation?
It makes sense, but is very boring. On the other hand, the eth is good for icos...
MAKE ETHEREUM $400 AGAIN!
Thanks for the interesting point... that would explain the drops on coinmarketcap, which until now I failed to convince myself about ;-)
This post has been ranked within the top 50 most undervalued posts in the second half of Jul 08. We estimate that this post is undervalued by $38.22 as compared to a scenario in which every voter had an equal say.
See the full rankings and details in The Daily Tribune: Jul 08 - Part II. You can also read about some of our methodology, data analysis and technical details in our initial post.
If you are the author and would prefer not to receive these comments, simply reply "Stop" to this comment.
Insightful article, I certainly hope that you're right about the price correction. Ethereum still has a lot more than just a medium for ICOs which in my opinion are a waste of resources.
Keep up the good work
Damien
This is good. Ethereum was a bit expensive and now it's cheap enough for me and my friends to get in at a low price. In the next year or two it will be over $1000 anyway.
It's extremely important that we research thoroughly before we buy anything. Look out if the project has a Twitter account and on top of that, check wether the team provide with daily updates of its situation. Mind the scams!
Very interesting debate @calaber24p! But I'm not sure the number of fake or faled ICOs based on Ethereum could modify the value of Ethereum, as the value per se of it is the possibilities it offers.
We'll see how does it follow :-)
The rate at which ethereum is falling it might discover oil.....lol
Long live Vitalik and Ethereum, if not I will be there to pick up the scraps. I am too busy voraciously learning about the technology behind all of this to worry about micro/hyper micro trends like this.
I believe ETH is dead, it wont recover as there's better coins up and coming. I think Stratis is one of those coins, it will offer the only good thing ETH does (ICO's) but much much more.
Good article! So with ETH being affected by ICO's and uncertainty in BTC, does that only leave LTC as the safe haven until after 1 AUG?
Good article. ICO's could be the reason. Lets wait for the end of the quarter and see what happens.