Good night guys! I want to make a reflexion about the currently cryptocurrency market situation. As you´ve already noticed, the prices of some cryptocurrencies just rocketed from the early beginning of this year. A clear example of this is Ethereum, its value has risen up 3000% since January. Nowadays market coin prices are looking very worrisome for several reasons, ranging from the influx of investors to the onslaught of initial coin offerings (ICOs). A correction of the prices is inevitable, as we are seeing these last weeks, so maybe it would be smart if we just take our profits out and wait for the end of the correction and buy at lower prices.
The main example of this trend is Ethereum as I've said. Since January, Ethereum plus all the alternative coins like Augur, Golem or Gnosis have been swollen up by an enormous amount of capital which have made this currency’s price rapidly raised up. The reality was that there were no other “trustfull” coins to invest in: people preferred to keep their capital in ether for example because the profits have historically been better than other altcoins.
Suddenly, the alternative ethereum-based coins came in and provided a bunch of new investment opportunities for people to take advantage of. So ethereum investors funneled ether into the initial coin offerings (ICOs) of startup building companies on top of etherum, getting tradeable tokens in exchange. People could have either cashed in or waited and speculated on the rise of these tokens. As ether as base, capital now is being directed to this new coins, leaving apart the ether influx, so its value could either stabilize or fall.
Meanwhile there are investors who are still holding the moment in which ethereum´s market cap will exceed bitcoin´s. The problem people don´t realize is that they cannot compare ethereum´s market cap alone vs bitcoin´s, but they have to include all its based-altcoins. Currently, seven of the top 10 coins are already based on ethereum. As soon as new ethereum-based tokens arise, people who are waiting may see how ethereum value dilutes among them.
The rise of ether prices in the last few months have fed the speculation from investors who sees this coin as the next bitcoin and it has produced the enormous investment in the coin.
Proof of this is the rise of Ethereum classic, up from $5.86 on April 30 to $21.53 today, a product of a rupture in its blockchain community which has nothing to do with ethereum although they share the same basic technology. Some predictors forseen its fall, and yet this hasn’t stopped its price to rise, maybe because some people think they’re both the same.
A quick glance around internet, even inside steemit, shows public interest in ethereum expecting it to make them rich, and then they moan about not getting an instant return on their investment while the value has grown around 90% in the last month. This has touched a point where when there’s no news about ethereum there’s a downward trend in price which implies that as soon as the press stops publishing about it, its price will deflate. In this atmosphere you cannot invest rationally.
I wouldn’t buy ethereum now, at least at this price. There are many other interesting coins with the potential to scale up, like antshares or mysterious. The potential upside compared to risk seems askew at today´s price. But it can also happen that this endless influx in ethereum and its based-coin overwhelm its bubble and doesn´t end up bursting. It´s up to you taking the risk or not.