Ethereum's price is coming down. It's crashing. In June we saw it at € 340, it is now € 170; It's 50% less. In the last few days, there has been a panic in the community: do I have to sell? I have to buy ? And all investors rushed to save their wallets.
So why did the market fall?
First of all, I would like to point out that nothing has changed in the Ethereum project. There are no negative news (perhaps increased phishing attempts but nothing more) or fantastic updates. Nothing has changed, Ethereum is always a revolutionary technology and its roadmap remains the same. You, then, will ask what has been the collapse of the last few days. Here are the answers.
Collecting profit and panic by "amateur" traders.
ETH has just emerged from one of its longest races, reaching the highest level in its history last month. Of course, many people have decided to take advantage of this opportunity to collect the profits they earn. This caused a downturn in the price, a stabilization of ETH's value and once the stalled situation was reached, even the most optimistic investor realized that it was time to liquidate or at least scalate the position to collect the profit achieved after a positive trend as relevant.
At the same time, not to be underestimated, thanks to the peak in the value of Ethereum many people (which we call amateur traders) have bought the asset in question during the hype. This, of course, is one of the reasons why the ETH has reached its highest historic level. Certainly, these amateur investors hoped for a quick profit when they heard the famous stories about the cryptovalutes. This did not happen, and when they saw the price drop at the expense of their investments, they went panic, liquidating their positions without knowledge of cause and remaining with a handful of flies.
Monetization of ICOs
The peak of ETH's prices was accompanied by the presentation of countless ICOs that had collected figures in ETH: Cosmos $ 16 million, Status $ 95 million, and $ 153 million Bancor. Unfortunately, many of these ICOs are not about to launch any product by collecting these figures thanks to excellent marketing managers and well-written whitepapers. This type of fundraising is called by experts "irrational exuberance" just to point out the illogicality of the numbers that these "startups" on blockchain manage to reach. Once these new generation companies accumulate these impressive capitals, they clearly have to convert at least part of the funds into EUR / USD to carry out projects, pay employees and developers, etc ... Besides, we must not underestimate that not all new Entrepreneurs aim for socially sustainable results, but there are startups that after the ICO monetize all received ether and collect the profit without carrying out the proposed project during the campaign; This is because we are talking about markets that are still unregulated, rectifying: absolutely unregulated.
Market Manipulation
As I have just stressed the world of cryptovalute is not, unfortunately, regulated. The manipulations that would frighten the jail in the case of stock markets or any of the markets already regulated are completely legal in the crypto market because of regulatory gaps not yet filled by financial legislators. This allows high market manipulation. I'll give you an example to let you know how easy it is to manipulate such volatile markets: some days ago a social video was posted on a boy who noticed a bot that buys every 30 seconds 40 ETHs (at a price of $ 200 are about 1 million Dollars in one hour). Nevertheless, the young trader did not understand how it could be that with such barriers Eth price continued to fall. Going to control the blockchain realized that another bot sold 50 eths every 30 seconds!
Certainly, despite all criticisms and this crash Ethereum remains a very innovative and improving project, and as all pioneering projects in a sector need time to be perfected and to reach your stability. Do not despair and wait for the new positive fluctuation that will bring ETH to higher levels than those already experienced.
