Why is the Ethereum Price Dropping and Will it Recover?
A lot of people are concerned about the current Ethereum price trend. Ether’s value has dropped significantly these past few days. The entire cryptocurrency scene is in a bearish market right now, yet it seems Ethereum is getting the worst of it compared to other major altcoins. One thing people would like to know is why this is happening right now.
The Rise and Fall of Ethereum in 2017
There are many different reasons why Ethereum’s price is falling after its incredible run during the past few months. Any strong value increase will ultimately lead to a correction. Anyone who thinks Ethereum could escape such a correction is either delusional or has no idea how the cryptocurrency ecosystem -or any market, really- works. It is impossible to see a currency’s value go up by over 1,000% in just a few weeks without some degree of correction. Unfortunately for Ethereum users, that correction is rather severe.
Finding a proper explanation for this trend is not easy, as it appears most explanations are based on opinions. There are those who feel the uncertainty regarding Bitcoin is partially to blame for all of this as well. There is a certain truth to that. Bitcoin’s price will dictate the value of all other currencies, including Ethereum. Another reason may be the large investors – known as whales, who are looking to prey on weak minded traders and facilitate panic selling.
People who firmly believe in the underlying value of Ethereum have nothing to worry about. After all, the value of Ether is still higher compared to what it was just under a year ago. Anyone who bought ETH at around $400 will be rather disappointed. One golden rule in cryptocurrency is to never choose a pump and buy a currency at the peak. There are still a lot of people who never got that message, apparently.
There are also some concerns over the underlying Ethereum technology as well. The network has seen multiple instances of congestion. Ethereum’s blockchain is not immutable, as that trait was lost when the developers decided to roll back transactions on the blockchain to bail out The DAO’s investors.
If the technology is not safe from censorship, rollbacks, or alterations, it does not have much of an intrinsic value to many. It is rather amazing how many people overlook that fact these days. To some people, this may seem like something that would only happen once, but that is not necessarily the case. Another rollback could happen at any given time, should it ever be needed. A dangerous precedent has been set.
In the end, any price decline is often a correlation of many different factors. First and foremost, the momentum has to end at some point. Nothing can go up indefinitely, otherwise, everyone in cryptocurrency would become rich within the week. While that may sound like much fun, the ecosystem needs a constant flow of new investor money to make such a goal even remotely achievable. Right now, the money is heading the other direction.
There is no reason to think Ethereum cannot recover. When this will happen, and what will drive the increase is anyone’s guess. The value increase to $400 was quite a steep one, and a lot of “dumb money” found its way into cryptocurrency. It appears Ethereum will need Bitcoin to go up in value to have a fighting chance. The flippening will not happen anytime soon if this trend continues. Ethereum’s value is still on the high end of the scale, considering all of the issues this ecosystem is dealing with right now.