Miserable fate of Ethereum explained
|- Ethereum is down 72% since the start of the year.
- Downside trend in ICO market is one of the factors behind Ether sell-off.
- The market is disappointed with slow institutional adoption.
Ethereum has lost over 72% since the beginning of the year to much disappointment of those who believed that it would eventually replace Bitcoin as the most valuable and popular digital asset. Now, these forecasts are things of the past, as the cryptocurrency market shows no signs of upcoming grand resurgence.
While all major coins including Bitcoin dropped significantly, Ether is among the biggest losers. Much of its growth was based on the hype around so-called Initial Coin Offerings (ICO) as the overwhelming majority of ICO projects - both genuine entrepreneurs and outright fraudsters - deployed their tokens on Ethereum network and accepted Ether as a means of payment for their assets. Now that the hype is over, Ethereum is left unwanted.
Moreover, many experts believe, that Ethereum price decline prompted ICO projects to cash out their Ether-based proceeds by exchanging the coins for fiat money, which exacerbated the decline. The trend is likely to continue if new projects don's start generating profits.
“Demand for ICOs really drove up the price. Now, money coming out of the ICOs is one of the things that’s really battered Ether in recent months,” said Martin Walker, director at the Centre for Evidence-Based Management, a think-tank cited by the Financial Times.
Institutional adoption turned out to be a big disappointment
Last year people waited for institutional investors to come and propel the market to the moon. While some financial institutions and payment giants do show interest in the concept, the mainstream adoption is as far as it was a year ago.
“The narrative that everyone was expecting, for all these institutional investors to come in pouring in their money — it didn’t happen. The narrative popped. It was all a very, very big bubble,” Fadi Aboualfa, founder of blockchain research company Diar explains.
ETH/USD, the technical picture
ETH/USD is moving in a range limited by $255 on the upside and $180 on the downside since the beginning of September. While the price broke above the long-term sloping trendline that goes a; the way down from May 6 high, the recovery momentum is nowhere to be seen, which casts doubt on the Ethereum's future. ETH/USD is changing hands at $203.96, with the first resistance seen at $226-$223 congestion zone, which includes DMA50 and former sell-off level. However, buyers need to push the price above $255 to set the Bulls' ball rolling.
ETH/USD, the daily chart
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