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Ever since it hit the highs of over $ 1,400 in mid-January, Ethereum has been stuck in a bitter downtrend, punctuated only with relief events to meet a series of lower peaks. Currently, the cryptocurrency is trading at less than $ 300, a price not seen since November 2017.
To put it in perspective, the loss represents the removal of just over one hundred billion from the market capitalization of Ethereum, a value higher than GDP of Slovakia, and not far from the entire net worth of Jeff Bezos. In terms of Crypto's total capitalization share, Ethereum stands at around 14%, far from its maximum of 32% in June of last year, when it was rapidly approaching Bitcoin, which at the time held 38% (from then Bitcoin has recovered up to 54%).
But are the foundations or the technicians who drive this crisis? Does the fall in price reflect a fundamental flaw, or is Ethereum just taken from the wrong side of another tumultuous market cycle?
Technical Doubts
Falling prices are not necessarily indicative of defective projects, but technical uncertainty does not fill investors with confidence, and while market sentiment fluctuates from bullish to bearish, small question marks become more existential doubts.
Ethereum's path to decentralization remains hampered by unanswered questions, and cryptocurrency critics have no shortage of ammunition unresolved issues about downsizing, concerns about insecure smart contracts and growing competition as more and more organizations choose to build their own blockchains.
Perhaps the most obvious evidence of weakness came from Dapps, who with a bit of fun and games, proved to be able to jeopardize the normal functioning of the network, as seen with CryptoKitti es and more recently Ponzi schemes .
Along with issues of downsizing, which have solutions on the road in the form of Casper and Sharding some critics suggest that greater centralization on the network is damaging its credibility, proposing larger blocks and the consent algorithm of the Stability Test leading to the centralization of power by those who have enough money: the entry barrier to stakeout on the network is 32 ETH.
Jimmy Zhong, co-founder and CEO of Ethereum competitor IOST suggests that these technical problems could contribute to the decline of Ethereum:
"Some of this fall in prices it could be due to the fact that the platform that Ethereum has promised since its launch is still so far.Meshed by the problems of downsizing and clearly in difficulty to keep up with platforms that are not hampered by legacy technology, there are cracks that show Ethereum's armor, which is one of the reasons why Ethereum decoupling is a big problem and why companies are starting to show interest in the development of their blockchains. "
Dumping of ICO funds [19659005] How the bear market persists The ICOs who raised the funds last year are starting to open their treasures and are selling It gives more portions of Ether that have collected through symbolic sales.
Data collected by crypto analytics firm Santiment suggests that startups have spent more than 110,000 ETHs in the last 30 days. Which, according to Biswa Das founding member of Crypto Hedge Fund Bloomwater Capital, is a last effort to cover operating expenses in fear that the market will move downwards:
"These startups are collecting many funds but they do not have treasury management or sufficient liquidity management experience, so they sell too early and cause a lot of pressure in the market.They went all right last year, but right now the market is so fragile that it causes a lot of pressure. "
The best token projects, however, are keeping their noses on the stone, says CoinList co-founder Andy Bromberg. "Ethereum's price volatility is the result of market pressures, not something more fundamental around technology, which is what most high-quality projects care about. low to focus on building their products and businesses, and not to look at prices. "
Market cycles
It is not only ICO projects that feel the blow, but also retail investors uncertain, who are scrambling to get out of the plateaus that have endured the weight of the market crisis – with coins like the XRP down more than 40% in the last 30 days, compared to the bitcoin that it's only about seven percent down.
This dramatic price movement, according to some experts, has a key Darwinian purpose: to eliminate the weak. Josh Fraser, co-founder of the peer-to-peer market platform, Origin compares the current downward phase to a purge, which only projects with real potential will survive:
"We have already gone through this cycle and we will face it again: the hype and exuberance of last year has passed, but the real work continues in the meantime. Ethereum's development tools like Truffle are seeing a record number downloads … and a significant amount of innovation is happening every day in the Ethereum community.At the dotcom bubble, companies like Amazon and Google have been able to thrive, while many others around them have crashed and burned I think we will probably see a similar showdown with blockchain projects.We will find out which teams and ideas are here in the long run. "
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