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At the start of today, September 9th, the price of Eth, Ethereum's native cryptocurrency, fell to its annual low at $ 185.
While ETH rebounded past the sign of $ 200 after an unexpected recovery of Bitcoin from $ 6,190 to $ 6,450, since July ETH has seen a worse decline in value compared to other major cryptocurrencies.
How much is due to ICO Sell Off?
Towards the end of 2017, the price of Eth crossed the $ 1,500 mark and ERC20 token investors on the Ethereum protocol achieved returns 10 to 100 times compared to their initial coin offer (ICO) .
Token investors such as EOS, Ontology, ICON, Zilliqa and 0x have seen huge gains in late 2017, at the height of the cryptocurrency market.
But in recent months, the price of ERC20 tokens has fallen substantially against Bitcoin, which also saw a 70% decline compared to the US dollar. Ontology and ICON have seen losses of 75-80% against Bitcoin, losing more than 95% compared to the US dollar.
Most analysts in the cryptocurrency industry have attributed the decline in the price of ETH to the sale of ERC20 blockchain projects that have raised millions of dollars in ETH in their token sales.
As the price of ETH began to decline and the cryptocurrency market entered a bear market, analysts said that ERC20 projects began selling their holdings in ETH, causing an ETH in a downward trend more intense than the other major cryptocurrencies.
It is evident that the decision of the ERC20 projects on Ethereum to sell large quantities of panic-stricken ETH contributed to a large extent to the downward trend of the Eth.
Preventing in the Future?
Earlier this week, Augur co-creator Joey Krug responded to some of the criticisms made by investors in the cryptocurrency community about Augur's team decision to sell ETH for $ 0.7 to finance the # 39; operation of the project.
Krug stated that Augur sold all ETH which he collected in his token sales immediately after his ICO to finance its development, adding that Augur is not a hedge fund but a project that works to create a sophisticated decentralized system.
If Augur had sold its holdings in ETH to $ 1,000 at the end of 2017, instead of $ 700,000, Augur could have raised a billion dollars.
But, as Krug points out, investors in the ICO market do not provide capital to blockchain projects to operate as hedge funds but to maximize their resources to create an application or a decentralized protocol.
Linda Xie, 0x advisor and co-founder of Scalar Capital, said her team advised projects to liquidate their ETH during their symbolic sale to finance operations.
"You and the Augur team did the right thing and I advised the projects to do the same, and it's easy to see all of this in hindsight as the price of ETH could easily have gone by 39; other part while it was being built, "said Xie
.
The massive ETH sale started by ICO came about because ICO wanted to avoid losing an event like Augur in 2016. But not only is it extremely difficult to measure the peak and the bottom of assets, investors have not raised millions of dollars for ERC20 projects to trade and invest in the cryptocurrency market.
The approach of Augur, Xie and other major projects, investors and accelerators to prevent blockchain projects from functioning as hedge funds to open source developer communities could prevent a future downtrend for ETH in the future.
Close-up image of Shutterstock. TradingView Charts.
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