Ethereum has taken a hit. Over the course of a single week, the Ethereum network has witnessed a drop in market cap of over 33% reaching exchange prices slightly below $200. For long-time ETH holders, this comes as quite a shock considering the relative stability of ETH and its assumed spot as the de-facto #2 cryptocurrency.
Speculation has run rampant regarding the cause of this decline. The most public and obvious problem for Ethereum being the consistent sell-off of ETH in large volumes, presumably by the many ETH-based ICOs that sprouted up in mid-to-late 2017. Some have speculated that this sell-off is simply businesses securing funds for a potential short-term crypto winter as they develop their products further. The less optimistic critics claim these groups along with speculation whales are simply cutting their losses and getting out while the getting is good.
To add fuel to the fire, at just the right moment a Techcrunch article was released proposing that the ETH token would eventually be worthless due to economic abstraction (using other Ethereum network tokens for payment). Of course, when one of the world’s most popular tech startup blogs say this, many in the tech space listen. Ethereum co-founder Vitalik Buterin, being the open and reasonable person he is, responded by saying “In Ethereum as it presently exists, this is absolutely true …”. To some, this was a confirmation that the virtual Ethereum sky was falling but Vitalik went on to say “However, the community is strongly considering two proposals, both of which have the property that they enshrine the need to pay ETH at protocol level …”. Not exactly the absolute rebuttal ETH holders were looking for but a mostly-positive indication that ETH tokens would remain relevant in the Ethereum ecosystem.
ETH is not going anywhere. The idea that anyone wants a system where miners need to deal with hundreds, if not thousands, of different tokens is not only crazy but likely impossible. There are thousands of projects being developed on the Ethereum blockchain. And as they start releasing in 2019, we’ll be seeing transactions requiring ETH.
The current sell-off aside, there really isn’t any bad news when it comes to Ethereum. Projects are coming along well, every day more countries and corporations announce their intention to develop future blockchain ideas, a major update is likely to happen next month which will lessen the rewards to miners (which is almost guaranteed to increase the value), and it’s likely the SEC will soon approve crypto ETF’s.
The price may drop even more, but the technology is stronger than ever and that’s in what one is investing.