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Bears hit the cryptocurrency market today and Ethereum was one of the most serious victims.
The third largest cryptocurrency in the world has canceled up to $ 2.25 billion from its market capitalization. Meanwhile, its value fell 12% from a maximum intraday to $ 177 to $ 155.60 – its new intraday minimum – within a few hours, based on aggregate data available on CoinMarketCap.com. Aayush Jindal, a crypto-market analyst at NewsBTC, has predicted further declines in the Ether-to-dollar market, citing a critical bearish trendline that is capping any upward bid for the digital currency.
SOURCE: COINMARKETCAP.COM
"There's a key linking the downtrend line formed with the resistance at $ 178 on the hourly chart of Eth / USD," he predicted.
ICO probably to intensify the sales action
A report that comes at the behest of Diar, a daily encrypted newsletter, has also found strong bearish catalysts that point to an extended sales action in the Ethereum market. The study based its bearish forecast on the possibility that ICO's main projects can liquidate their holdings in ETH.
"Some of the most popular and anticipated projects, most of which have yet to be launched, are sitting on treasures north of $ 500 million, which excludes cash, as well as their token reserves," noted the search for Diar.
Larry Cermak, chief analyst at Diar, believed that this decentralized application design would become unprofitable. In the meantime, they will continue to connect Ether to cover their expenses against lower market demand. The imbalance will prove to be bearish for the Ethereum market, as a whole.
"Obviously, many ICO companies will continue to sell ETH to cover operational expenses and fund their businesses," Cermak said in a tweet. "It's important to realize that most of these projects do not generate revenue, and most likely never will."
The question of driving Ether Bulls
The Diar analysis offered its predictions based on how ICO projects would behave with their Ether participations. It provided a clearer view of the projects which, according to reports, hold about 3.7% of the total Ether coins in circulation. While the likelihood of the ICO project selling their entire holdings is high, the same can not be expected from the demand side that continues to fluctuate.
Retail investors, hedge funds and any other speculator could continue to consider Ether as an investable asset, similar to Bitcoin. On the other hand, blockchain projects could create network effects for their platform growth and use Ether as money or valuable store.
Thus, scalability should continue to challenge the Ethereum network and hinder its adoption rate on a larger scale. Other projects are also developing in the blockchain space to circumvent the shortcomings of the Ethereum, but they are also facing challenges on some factors related to feasibility – and even decentralization.
In a short-term scenario, the Ethereum market should act on the vagaries of speculative investors. This means that an extended sales action should establish a new fund and retrace its steps to find equally crucial resistance, just like Bitcoin.
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