WHAT IS CRASHING THE PRICE OF ETHEREUM? I DID SOME DIGGING
Image Credit; ProfitConfidential
In less than a year, Ethereum became a household name for several emerging tokens, in fact, it is now one of the Backbone ecosystems for most Cryptocurrencies. This exploded its price as high as $1400 late in 2017/early weeks in 2018, but in just three months down the line; everything collapsed like the "Wall of Jericho".
Credit; CNN
Ethereum is the second Largest coin in the Crypto-Market, known for its absolute importance and dominance just like Bitcoin but faster transaction feature which makes it ideal for Initial Coin Offerings of several Tokens. For this, it rose from the shadows somewhere below $10 and hitting record high of $1,417.38 according to CoinDesk in late 2017. One of the Features of cryptocurrencies, in General, is their high Octane Volatility, which could crumble investors or make them extremely rich in a twinkle of an eye due to dozens of opportunities associated to it. For both amateur and experienced crypto-investors, here are some of the factors responsible for the dip in the price of this special Altcoin.
EXCHANGES
The first factor is the various exchanges where most tokens are traded, the functionality of the market has been greatly affected by the rate of increase of interest on Cryptocurrencies, therefore several exchanges had put restrictions on new users. For Example, Bitfinex in December restricted new users account registration in other to better serve old users. This, in turn, prevented a lot of new users who wanted to trade Ethereum. Although it was a temporary act but with a major effect, also Kraken users Worldwide were affected by the upgrade that took two days instead of two hours, this both happened coincidentally the same period. It is a relatively new Eco-system, faced with problems and upgrades which have huge impacts on the price of several tokens especially Ethereum.
PROFIT IN MINING
At the time when Ethereum was between $300 and $400, there was high profit for miners and a huge incentive is gotten from selling at a high price. But the prices of Ethereum is overseeing profitability in mining and speculative actions of the market. Due to miners influx into the ecosystem, the resultant effect is lower profit for these miners hence they HODL the little profit they made. Minning has a tricky nature, new ideas designed to mine Ether are popping up daily and the hash rate is now double or triple of what it used to be in mid-2017with price level around $120, almost 10 times higher in the early part of 2017. Hence we all experienced something called the "True Price of Ethereum" which currently hovers around $300 and $400 as it was in the early days.The war between miners selling force and influx of new investors ensues when hash rate increased at 1000Gh/s per day.
"to accelerate in significant amounts in the short-term when more people can get their hands on graphics cards. At a current hash rate of ~60000 Gh/s this represents an approximate increase in mining difficulty seems to happen at a level of about 1-2% per day."- FinanceMagnates
Miners are HODLing on to their mined tokens with the hope of letting go when prices appreciate and this makes it bad for the price of Ether.
REGULATIONS
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Government policies in Major Developed Countries like China, South Korea is too harsh on the Cryptocurrencies which has a major impact on the Ecosystem of Ethereum; this result in less major investors and also long-term investors selling off. Market Cap has dropped several times because Bans placed on payment and transactions with cryptocurrencies and their exchanges by countries like China where huge investors lives. These actions have devastating "dip" on cryptocurrencies/Ethereum. South Korea also scrutinizing financial institutions having relations with crypto-exchanges and also finning major investors who own unknown trading accounts. Although there exist diversities which helps the fast recovery of the Crypto-space, this factors are major pointers for any investor to consider.
ETHERERUM's SILVER LINING
There is a proposed upgrade of Ethereum to Proof-of-state Network, which might put Ethereum back on the forefronts. Scalability and security is ensured with this proposed "Casper" software update and this seems like a revival strategy for Ethereum price. Thanks for Reading.
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