Despite keeping its second position by market capitalization, the price of Ethereum (ETH) has seen incredible highs and extreme lows over the last year. It is partly believed that these volatile changes are due to ICOs selling their large amounts of ETH to raise extra funds. However, a new study by Bitmex Research and Tokenanalyst states otherwise.
Find the culprit
The study examined 222 ICO projects, which together collected 5.5 billion dollars of Ether. Interestingly, these groups then continued to sell almost the same amount, which means that ICO sales will probably not be the cause of the recent decline in Ethereum.
However, the study finds that "the figures are somewhat distorted by the EOS project, which has significantly increased about 70% of the Ethereum (based on the US value) of all projects on our list, if our estimates they are correct". even without the EOS case, the theory remains the same.
In reaching this conclusion, the researchers analyzed the amount of ETH raised from 222 ICOs and totaling it (15.1 million ETHs) before aggregating how much of this ETH was sold or transferred (11.3 million ETHs). This means that approximately 3.85 million ETHs are still held by these projects. EOS can be ignored, since it has got rid of all its ETH.
"Despite the 85% reduction in the price of Ethereum from its peak, the projects have achieved gains of $ 727 million due to the profits of Ethereum that they have already sold, often sold before the recent price collapse", we read in the report. "The 3.8 million Ethereums still in the balance sheets of these projects may not have a significant impact on the price of Ethereum, as they represent a reasonably small proportion of the supply of the Ethereum of 102 million. projects could be reasonably confident rather than having to panic to sell. "
In addition, the report states that some ICOs could be sitting on profits of $ 93 million based on the current price of Ethereum, while others are probably at a loss. Unrealized losses of all projects amount to $ 311 million, but unrealized profits reach $ 403 million.
Suggested reading : Find out how EOS compares with Ethereum in our coin comparison article.
Calculation of the total
In the last 26 months, the collective treasuries of the ICO have reached a peak of 5.1 million ETH, well below the 15.2 million collected. This could mean that some ETHs have been re-used for new projects after being sold.
In detailing the EOS statistics, the researchers had to study 171 "internal transactions" that transferred ETH outside the network. These transactions represented 7.2 million ETH ($ 3.9 billion). However, researchers are not entirely sure that 7.2 million have not been counted twice. They have reason to believe that the analysis is legitimate, but simply can not be as secure as they are with other projects.
In short, this study finds that ICO projects have almost no effect on the price of Ethereum as previously thought. In fact, reports find that "ICOs have clearly been a phenomenal success, to the point that even a further significant fall in the value of Ethereum will only compromise success."
However, it is impossible to say what these results mean for the future of Ethereum.