The DAO is finished, what does this mean for the Price of Ether?

in #ethereum8 years ago

The DAO is finished, and one thing is for sure, somewhere between 70% and 100% of the Ether within the DAO and child DAO will available to trade on the open market within the next 2 months. Yet with this news, Ethereum in Dollar terms is still trading higher than Pre-DAO levels @$12 vs $8-10 pre DAO.

First of all, outlining the scenario's for the release of the DAO funds as I see, would be happy to hear others opinions on this...

  1. Soft Fork-Hard Fork would return 100% of Ether Funds to DAO holders. Held in over 25,000 accounts, there is potential for a panic sell on the other side, putting short term pressure on the price of Ether as people scramble to exchange Ether for Bitcoin. There will be many participants, however, that are in Ether for the longterm like myself, who would are holding come what may.
  2. The hacker gets to walk away with the funds. The Hacker may sit on the Ether, but If a dump took place, having 4% of Ether in Circulation, this would be worst case scenario for Ether investors.
  3. Soft Fork happens and the hackers child DAO remains frozen. This would result in DAO holders getting back roughly 70% of their Ether, with the further 30% left frozen on the network.
  4. The whole DAO ends up getting completely depleted, and the Hacker(s) walk away with everything (this could send Ether aggressively lower). One person having control over 14% of Ether in circulation by such means would be really bad for the network.
  5. The whole DAO ends up getting depleted before a soft fork, no hard fork ever takes place and the 14% of Ether supply sat sat on the network for the foreseeable future.

Most likely scenario's IMO, are 1 and 3 which would both entail a large increase in available Ether to trade on the open market. Overall, I think we will see Ether trade lower over the coming months, but this will represent a buying opportunity in the long term.

Interestingly, looking https://coinmarketcap.com/ today, Ether has 24hr traded volume of 10% of it market cap, compared will Bitcoins 1.6%. Having such high turnover does suggest there is appetite to absorb sell orders as well as buy orders, but it also suggests that the market should be trading a fair price for where we are currently at. An additional 1% either way has the capacity to move the market far more than would first meet the eye.

Happy to hear others thoughts

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