The interest of Ethereum is diminishing and the lack of ICO has caused a lowering of the ETH price, suggests new research. Data collected by D2 Capital indicate that a drop in demand caused Ether's recent slide; a decrease in the volume of ICOs and the objectives of smaller funds, being the main cause. "There is less demand for Ether because there is less hype for ICO than it was in 2017", said Primoz Kordez, co-founder of D2 Capital.
Ether had a negative trend for most of 2018. From its peak of $ 1,400 at the start of the year, the ETH price has failed to maintain a stable value. The currency had already fallen to $ 800 by February and dropped below $ 400 at the beginning of April; despite a small rally, ETH is now worth less than $ 300.
Ether had a value of $ 289 at the time of writing: it is a decline in the price of 80% from the & # 39, early 2018.
media in space – including Crypto Briefing – attributed a decline in the ETH price to a mass sale by ICO projects. Statistics have found that 57 projects have collectively sent 125,000 ETHs to their exchange portfolios. Although this does not necessarily mean that the projects sold their Ether, it suggests that the projects were at least trying to liquidate their position.
Meanwhile, long-term interest in the project continued to decline in July, with a slight increase in August searches on Wikipedia and Google Trends.
The ETH price linked to the narrowing of the ICO market
The research of D2 Capital found that the estimated quantity of Ether sent to the exchanges was actually well below the previous months. 312,000 ETHs were sold on average each month over the last 12 months, making the volume sold in August about a third of the monthly average.
"The estimated amount of Ether sent to the exchanges was not as high as it had been throughout the year", said Kordez. "We decided to look at the demand side instead of finding the cause of a sliding ETH price".
ICO have been a popular tool for crowdfunding in 2017; the projects benefited from the high euphoria of the market and the lack of due diligence that allowed them to set high funding targets. The research suggests irresponsible or incompetent projects, as well as regulatory concerns, led to a reduction in ICO's participation in 2018.
Since Ether is the main asset used in ICOs, a price fall was caused by the decrease in demand; this has been compacted by projects that set lower funding targets – probably more sensible.
"I would say that ICOs are becoming increasingly rare", said Kordez. "The projects are still crowdfunding, but they focus more on the institutional investor who is not necessarily participating with Ether, but with alternative cryptocurrencies or even fiat".
Beginning of the end?
This could be the beginning of Ether problems. A recent TechCrunch article, Jeremy Rubin, suggested yesterday that he did not really need it. Dividing the fate of the Ether from that of the network, he argued that the ETH price could drop to zero if the Ethereum dApps began to pay the miners for transactions in other cryptocurrencies.
Kordez said that as a dApp platform and a smart contract provider, Ethereum continued to be the market leader. Despite long-term scalability issues and some migration projects to other networks, he argued that the Ethereum development team was still the strongest.
The ETH price is related to the demand. If investors lose interest in Ether, they will diminish in value. Projects that sell their ICO funds will drive the price even lower. Although it is an imperfect metric, the price remains the most obvious that the community uses to evaluate the profitability of a currency.
The author is invested in ETH, mentioned in this article.