Over the past few months, investors of Ethereum have had to fight off bears at nearly every turn, as the price of the asset recently established a new year-to-date low in a bout of acute selling pressure. However, some fear that the worse is yet to come.
Ethereum Falls Under $200 For The First Time Since August 2017
As reported by Ethereum World News on multiple occasions, the cryptocurrency market hasn’t had the best week, with the collective valuation of all crypto assets falling by over 20% in a matter of just a few days. While altcoins had it worst enough, there was one specific cryptocurrency that stood out (not in a good way) among the nearly 2000 crypto assets that are currently in existence.
To the surprise of some, this asset was Ethereum, which has fallen by approximately 33% in the past week, while Bitcoin has ‘only’ posted a loss of 11-12%. At one point on Saturday, Ethereum was worth $185 a piece, which was the first time that the price of ETH was less than $200 since August of last year. At the time of writing, however, Ethereum has since recovered to $202 but is still down around 1.5% in the past 24 hours.
ETH may be faring relatively well today, but it is still the worst performing crypto asset in the top 20 (as per CoinMarketCap). According to a forecast from Bloomberg Intelligence strategist Mike McGlone, Ether may fall further to a “support target of $155,” due to increasing competition from up and coming DApp/smart contract-focused blockchains, overall market volatility, and a maturing industry.
Why Is ETH Performing So Poorly?
Ethereum’s dismal performance has led some to ask what is causing such a drastic sell-off. At the time of writing, there currently are two primary theories that attempt to explain why the price of Ether is tumbling.
First, the introduction of a new BitMEX ETH perpetual swap contract, which allowed traders to short the price of ETH with up to 100x leverage in a similar manner to the XBT (BTC) BitMEX contract. As pointed out by Cryptoeazy on Twitter, since the arrival of the perpetual contract in early August, the price of Ether has fallen by 57%.
$ETH now -57% since launching on Bitmex in just over 1 month. pic.twitter.com/jfW4TCYcEE
— ₿-Eazy ? (@cryptoeazy) September 9, 2018
Although this hasn’t been confirmed, this statistic has led some to speculate that the arrival of the contract allowed pessimistic traders to weigh down on the price of ETH. Twitter user CryptoBat wrote: “Bitmex is the worst thing that has happened to ETH.”
Secondly but not least is the ICO sell-off factor, with many claiming that projects have begun to liquidate their war chests, which are often full of Ether, into fiat, leading to the current collapse of the market, not only ETH. As per data from Santiment, a foremost crypto analytics provider, projects have spent over 100,000 ETH in the past week, likely selling their holdings on exchanges en-masse, logically leading to a market drop like the one seen this week.
According to @santimentfeed‘s database, ICOs for which their Ethereum wallets are known have a visible balance of ETH 3.3 million, or $900 million at current prices. ETH 135K were transferred out / spent in the last 30 days (about 4%). #ICO
— Alex Krüger ?? (@Crypto_Macro) August 24, 2018
Photo by Florian van Duyn on Unsplash
