Ethereum is taking a DUMP! Parabolic selling has tanked it from an all-time high of nearly $1400 to less than $200… and dropping - an 88% drop in 8 months.
People are declaring Ethereum dead, a stark contrast from last year's "The Flippening"- when people were claiming that Ethereum was going to overtake Bitcoin as the number one cryptocurrency.
Now that Ethereum is under $200, people are saying the complete opposite - that it's going to zero!
Zero? That's a little dramatic, or is it?
Extremes are not usually the answer, the truth of any issue often lies somewhere in the middle. There are reasons for this Ethereum dump, but is there also hope for better times ahead?
2017- The Year of the ICO
In 2017, the ICO (initial coin offering) boom occurred. New coin projects were being launched at record speed, and people were buying Ethereum tokens as a method of buying into the ICO boom, creating huge demand on the price. This demand saw Ethereum's price rise from under $10 in January 2017 to $1400 one year later - a 14,000% increase.
As exciting as it was, that type of parabolic growth is unsustainable.
This dependency on Ethereum as the fuel for ICO funding created an interesting and dangerous dynamic. In order for these ICO's to develop their projects, they were going to have to cash out the Ethereum they'd raised to fund them. A consequence we are now seeing the results of as ICO's may be starting to sell off their Ethereum en mass.
"This dependency on Ethereum as the fuel for ICO funding created an interesting and dangerous dynamic."
2018 - The End of an ICO Era
This week, the SEC ruled that ICO's are securities, all but shutting down the ICO industry to US citizens. There will never be an ICO boom again like the one we saw last year. Sure, there will still be ICOs, but they'll be more heavily regulated and fewer people will be interested in that level of risk.
Although government regulation in crypto is a contentious subject, the limitations on ICO's could actually be a good thing. It will protect investors from getting burned because it will require projects to have more than just a white paper and a dream before they ask for investors' money.
Without the demand for ICO speculation pushing up the price, we're going to have to see something else drive Ethereum's demand - actual utility.
Creating a New Demand for Ethereum
Ethereum was built to be the internet 3.0, and the internet only works because people use it. Between EOS and Ethereum (both platform-based utilities) there are only 8 dapps (decentralized applications) that have greater than 300 active users.
Its value until now certainly hasn't been dependent on its utility, and that's what needs to change - the resurrection of Ethereum rests on the shoulders of developers.
The impetus that will drive the next Ethereum bull-run will be a trendy dapp built upon Ethereum's network - and it's going to have to be something that attracts more than 300 users per day.
In order to utilize a Dapp, users will have to purchase and use Ethereum tokens, building in an actual utility and use case for the Ethereum token beyond ICO funding.
Imagine what a decentralized version of Fortnite, which supports 40 million users a month, could do for Ethereum?
Ethereum won't have a chance to regain its glory until people are using the network for its intended purpose, and it could go through a similar downturn like Bitcoin did in 2014. But, the vision of Ethereum as internet 3.0 has generated a huge network of support and that vision gives it value even during price downtrends.
Ethereum Going Forward
In the short term, Ethereum is probably going to continue to drop but one thing is true - Ethereum has the most decentralized distributed network in the crypto-space and it's up to its network of supporters to keep it alive.
Though Ethereum has 50% more network support (nodes) than Bitcoin, it has a fraction of the computing power. Interestingly, Ethereum reached its all-time high hashrate (total network computing power) at the beginning of August, and has lost 15% in the last month - an ominous turn for the network. If people stop supporting the network before its utility has taken off, it really could die.
We don't know exactly where the bottom is, and we don't know if or when a long-term bull-trend could start. But we believe that once Ethereum has an actual utility, likely in the form of a popular Dapp, that we will see Ethereum stand on its own two legs as the demand for the cryptocurrency increases because of its actual use, instead of its role as an ICO intermediary. It may take time, but it's going to be exciting to watch when it happens.
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