Ethereum is way down right now, down a lot further than most would’ve anticipated based on past trading action. It’s down further than it was at this exact same time last year, a time when bitcoin was around 4200 dollars. On top of that, it also seemingly brought down the entire ERC-20 token market with it. So what gives? Why are the streets so red, and what led to these ridiculous sell offs?
ICOs - The first thing that comes to mind when trying to figure out why the market is acting the way it does, is to look at where the money is. Who has all this damn Ether anyway? In 2018 ICOs raised close to 15 billion dollars, most of that in Ethereum. These companies have investors, and employees and office space etc.. Basically they have a lot of expenses to cover, and a fiduciary responsibility to their private investors, so once that $400 resistance was broken, many companies sold off their Ethereum reserves to salvage as much capital as possible.
Scaling - Ever noticed how much money it costs in gas or how long it takes to transfer Ether when the network is congested? Yeah me too.. Nothing is more annoying than getting your Ether stuck in the cryptoverse for hours or days at a time. Scaling is a problem for Ethereum, nobody is denying that, and it doesn’t look like anything in the immediate future will solve this issue. On top of that, there are many large companies like EOS who are in the process of building faster more scalable platforms, so if developers of Ethereum don’t get their act together, they’ll fade into the forgotten realms of history.
EOS - Speaking of EOS, they are a huge threat to Ethereum, not only because they are a direct competitor promising a better product, but because they hold a boatload of Ether. Only in the crypto world can you have this kind of conflict of interest. Needless to say, I don’t know for sure if EOS is contributing to this current sell off of Ethereum, but I wouldn’t be surprised that if when Ethereum is feeling the heat, they throw a little gasoline on the fire by selling off some chunks.
Asia - Most experienced traders and investors out there know that the big 3 asian nations Korea, Japan and China are the bedrock of crypto world. The majority of trade volume, many of the largest crypto companies, generally the majority of the overall excitement and enthusiasm comes from Asia. I recently learned from a Korean friend of mine, that there were a lot crypto investors in Asia that were really expecting a bull run to happen in August. And when btc stalled out and dropped back to 6k, many sold off and left the market until market conditions improve. I can’t confirm this, but my friend follows the Asian markets a lot closer than me, and it would definitely explain a fast and far many things fell.
Too many damn cryptos - In my opinion, right now we are witnessing a consolidation towards good long term projects, and subsequently a purge of shitty worthless tokens. The money is just too spread out, there are way too many crypto companies trying to do the same thing and competing for the same space. This was always bound to happen, and now is as good a time as ever. I read white papers these days, and many of them seem like carbon copies of white papers I read before. Not too many out there are doing something uniquely different than competitors before them, and people are starting to realize this.
This is my general opinion of why we’re seeing the massive doom and gloom on the markets these days. I’d be curious about what others think. As always, thanks for listening and stay positive!