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Within a two-week period, August 1 to August 14, Ether's price, the cryptocurrency of the Ethereum network, fell 44%.
In 14 days, the price of Ethereum has plummeted from $ 470 to $ 260, reaching its lowest point in 2018 falling below the $ 300 for the first time since the beginning of November 2017. [19659003] The entire cryptocurrency market suffered a sharp decline in valuation, losing nearly $ 150 billion of its valuation in a month. But Ether, who behaved particularly well against the US dollar among other major cryptocurrencies like Bitcoin and Bitcoin Cash, quickly became one of the worst performing digital assets in August.
What a fueled the drop of Ether?
On August 14th, even after suffering such a sharp drop in price, Ether lost 18% of its value against the US dollar, falling from $ 300 to $ 260 within a 12-hour period.
While other cryptocurrencies have suffered strong decreases in value, Bitcoin, for example, has lost only 6% of its market capitalization compared to the US dollar.
During this week, many analysts including Eric Wall, a leading cryptocurrency researcher at the fintech Cinnober company, said blockchain projects that have raised hundreds of millions of dollars in Ether over the past 12 months have downloaded the 39; digital asset on the market for the exchange of public cryptocurrencies, creating a domino effect in the main exchanges.
"The problem when millions of dollars competitors from ETH to ETH can download ETH on the spot market and short ETH on the futures market first, so they are not only guaranteeing funding but also manipulating the underlying spot market in favor of their shorts, "Wall said .
It is important to recognize that the amount generated by ICOs in their token sales does not necessarily mean that new capital will enter the market but rather existing capital stored in major cryptocurrencies like Bitcoin and Ether moving to ICOs
If the ICO participants allocate millions of dollars in Ether to token sales, and the developers who drive the sales of tokens discharge the capital raised in Ether on the cryptocurrency exchange market, they indirectly become a massive sales order.
Consequently, the Foreign Exchange market has suffered in the last three months, as ICOs continued to dump large quantities of Ether onto the market.
BitMEX All-Time High Shorts
This week, Arthur Hay es, the CEO of BitMEX for the exchange of cryptocurrencies, revealed that in just a week, BitMEX became the biggest exchange for trading of ETHUSD, as its 50x based swap based on ETHUSD has evolved into the most liquid Ethereum trading pair in the global market.
Ether's excessively strong bearish trend and the rest of the market, it is clear that the increase in ETHUSD's trading pair activity hosted by BitMEX demonstrates an increase in the number of short-circuits placed by investors who have lost confidence in the short-term trend of Ether
While it is difficult to state definitively that the ICOs have brought the price of Ether to collapse, it is obvious that the liquidation of the capital raised by the sales of token played an important role in creating a strong downward trend for Ether.
Image highlighted by Shutterstock.
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