Cashing in the Free Money - ICOs and the reason for ETH dump
Everyone is wondering why Ethereum has been dumping so hard since July and the answer has laid in plain sight all along.
Throughout 2016-2018, most ICO's raised money on the Ethereum platform in ETH tokens. A large portion of these ICO's had the sole intention of selling this Ethereum and never having a product or continuously delaying it because they didn't really care.
Most of these ICO's made free money, so they weren't worried about selling at the top or bottom. A lot of the ICO selling happened in the second half of 2018 when prices looked like they had further room to go down.
BitMex research shows over $5.43 billion worth of Ethereum was raised by ICO's. EOS alone boasts half the total Ethereum raised in tokens and about $4 billion in fiat terms. This is because their ICO dragged on for so long, they were able to close the ICO at the best possible price.
Even the legitimate ICO's had to sell their ETH for fiat to fund their projects. Day to day activities, salaries, and other expenditure is still not viable to be fully paid for in cryptocurrency.
The overvaluation of ETH was due to the exponential ICO craze. The undervaluation was due to the selling of ETH by ICO's. With the thirdening (reducing block reward from 3 ETH to 2 ETH), the demand for ETH is seen to be higher than the future supply. This will significantly help bolster ETH in the future
Image source: TheNextWeb.com
- AB
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