Earlier this week, Ethereum (ETH) dropped to its lowest value in 4 months, sending some of its holders and supporters into a state of alarm.
The cryptocurrency which is known for essentially birthing initial coin offerings (ICOs) had its all time high just 3 months ago, when it reached the value of $1,432.88 on January 13, 2018.
Much has happened since then.
But even when Ethereum lost its four-figure value on February 2, 2018, it had not plummeted to this worrisome figure of $460.09 until now.
In fact, the last time Ethereum went close to $500 was on December 12.
The current market conditions now potentially point to Ethereum dropping below this value of $460 in the next few days, essentially flooring to $300.
Sell offs are one of the reasons why ethereum’s value is dropping
Similar to how events took place back in July 2017, when EOS cashed out a large chunk of the ETH that it had raised in its ICO, helping to contribute to Ethereum’s price drop and allowing speculators to raise heads, connections are now being made to more cash outs executed by EOS.
One Twitter user, a core developer at Slack channel Cryptocopia, recently mentioned that not only had EOS moved ETH, but it had recently transferred 50,000 ETH to Bitfinex.
“We know that it [EOS] moved 417k ETH in total. Of which, 163k ETH ended up in @bitfinex’s wallet.” He mentioned.
According to SanBase, a tracking project for ICOs and their ETH reserves, EOS spent more than 417,000 ETH in the last 30 days, with SIRIN Labs and Decentraland spending more than 128,000 ETH and more than 52,000 ETH, respectively.
The timing of these sell offs coincides with this recent drop in Ethereum, and much like July 2017, it seems that if the only reason behind the drop in value are these sell offs, then Ethereum’s value will continue to drop for at least a week or two before it starts picking up again.
Recovering from the subsequent sell offs from ICOs should be considered as Ethereum’s occupational hazard given that the funds in ICOs are only raised by startups so they can eventually move them to supplement their business operations. Therefore, it seems that it will take a few weeks for Ethereum to recover from this drop, as it did in 2017.
Sec’s ico investigation and probe could prolong that effect, however
That being said, the recent statement from the U.S. Securities and Exchange Commission (SEC) following its investigation into ICOs and their related entities, as reported by the Wall Street Journal, could have its effects on Ethereum’s recovery time on its value.
As stated at the start of this post, Ethereum, with its service for anyone to use its platform for issuing and creating their own ERC 20 tokens, is one of the core mechanisms behind the recent slew of ICOs that have been plaguing the authorities and institutions such as the SEC.
While Ethereum remains decentralized, if the panic regarding SEC’s possible reprimands and future actions against ICO centric entities continues, it could cause more organizations and individuals to sell their own ETH and speculate about the potential hazards of being associated with Ethereum.
However, as much pain as speculations can bring to a cryptocurrency, the fact remains that Ethereum and its platform with its worldwide nodes and immense community support remains an integral part of the cryptocurrency industry. While panic and rumors could affect it for a while, as they do for Bitcoin, it will not cause the cryptocurrency to vanish into darkness. The value could remain low for a while, but it will most likely pick up again once the dust settles.
More points which would help Ethereum’s value are the planned updates on the platform pertaining to the resolution of its scaling issues. If Ethereum developers get to roll out such an update during the next few weeks, then it will very likely have a positive effect on the cryptocurrency and its overall value as well.
Furthermore, resolving any debates in relation to the governance issues which Ethereum is facing over the Ethereum Improvement Proposal (EIP) 867 would only give it more value and strength as it progresses.
Regarding the eip and the governance issues it is causing for ethereum
The EIP 867 is a proposed improvement for the Ethereum network, which in case of any unforeseen incidents of loss of funds, such as theft or code errors, will allow reversal or retrieval of those funds to their original owners.
As per the EIP, affected users would be able to identify such issues to the network developers, who would then look into the issue and move forward with the reversal and retrieval of funds.
The debate that is going on about this EIP involves two groups, one which thinks that it is only fair for the users of the network as it provides them with financial security, and the other group which debates that this takes away the decentralization aspect of the network.
The heated debate is what has been causing governance issues at the Ethereum platform. While it has not caused any effects on the value as of now, resolving the debate will go a long way into uniting the community at this time.Follow us on Social Media: