Ethereum drops to $ 204 from short-term sellers pressure

The price of Ether (ETH) has fallen nearly 80% this year, from nearly $ 1,400 to $ 204 at the time of publication. The latter, after outperforming Bitcoin (BTC), experienced percentage growth last year, rising from just under $ 10 to over $ 1,000.

Last year, the digital currency industry launched numerous initial coin offerings (ICOs), which used the Ethereum blockchain to develop their platforms. Commenting on this viral trend, Kyle Chapman, a market analyst at Cosimo Ventures, said:

When people have seen ICO trends as they progress, it's easy to understand why people think this could be a long-term store of value.

Do not meet the expecations

Chapman further explained: "It was the call for that, and that's why you saw the extreme growth of last year." The Autonomous Next data analysis company estimated that the ICOs had raised more than $ 7 billion last year, most of them promising their investors a certain type of service or product in the form of utility chips ".

Despite the promises and big claims made by startups in the chain, many of them have turned out to be fraudulent schemes or just bad business ideas. However, some cryptographic projects have had moderate success, but their adoption rate is not as high as one could expect.

Given the drop in ether prices and the general drop in cryptocurrency prices, Multicoin Capital's hedge fund manager Kyle Samani said:

"People have started to create applications and software, but the market has gotten ahead, they realize that it must be long-term and that some investors do not have the patience".

"Thinly Traded", "Desperate For Legitmacy"

According to CryptoGlobe, analysts and researchers have observed that short-term traders dominate the cryptocurrency market. In addition, many reports indicate that digital currencies remain "poorly negotiated" due to lack of institutional support.

Larry Shover, a seasoned Wall Street analyst, recently said that cryptocurrencies are "desperate" for legitimacy. Most market analysts cited the same reasons for the lack of investor confidence in cryptos. They include the lack of proper regulatory oversight and the growing number of fraudulent systems associated with cryptocurrencies.

While Ethereum has to deal with the price drop of its native token and major scalability issues, a number of other competing platforms are now on the market. Kowala CEO Stablecoin, Eiland Glover, commented on the emergence of intelligent platforms and competing DApp platforms noting:

"Ethereum is facing a massive crisis of investor confidence that it can not scale quickly in the face of competition."

Glover added:

"The darkness of the Ethereum track and the lack of adoption of the DApp standard are detrimental to both ER20 symbolic prices and the market as a whole."

Cryptographic platforms currently competing with Ethereum include NEAR's EOS project, Qtum, Tezos and Cardano, largely funded by Dan Larimer. Matthew Newton, eToro Market Analyst, noted that lower Ether prices can also be attributed to [fear, uncertainty, doubt] spreading around the death of the ether, who can [be] contributing to an emotional sale ".

Newton also said that many ICOs that owned ETH "saw a decline in fortune last year." According to the eToro researcher, this has forced many start-ups to liquidate a significant portion of their Ether holdings and various digital tokens.

In addition, Ambrosus blockchain network co-founder Angel Versetti said the Ethereum platform was working even more efficiently than the new blockchains, which also provide support for the development of smart contracts and DApp.

Too much "speculation"

Versetti explained:

"There are more stakeholders (large digital tokens) with concentrated power among other altcoins, which promote a narrative that Ethereum's competitors are better and better. It's important to keep in mind that these predictions, and are just speculative in nature. "

Short sellers have also lowered the price of ether this year, as the BitMEX cryptographic derivatives trading platform has launched a new trading product that allows traders to place bets on the ETH. Goldman Sachs analyst Timothy Tam said:

"The reality is that it's much easier to reduce the ether now, and that's contributing to the downward movement." Ether underperformed, but his use case did not not changed. "

Tam added that market manipulation regulators found with bitcoin (BTC) are also present in the ether trade. He said: "We are seeing abnormal price movements, and that sounds strange."