The last 48 hours have seen a significant collapse in the prices of nearly all crypto-currencies with Bitcoin at one-month lows, and Ethereum tumbling below $200, but volatility is not expected to subside as August 1st looms as Bitcoin undergoes a 'coming of age' and the current 'civil war' between Core and miners comes to a head...
Steve Prentice, via ValueWalk, explains the current ethereum crash and the August fork...
Hot off the heels of the stellar Ethereum price crash of June 21, in which the price went from $319 to 10 cents on the GDAX exchange within an hour, it looks like it’s happening again. It is not so severe this time, like that second hill on a fairground roller coaster, it’s not carrying investors down as far and as fast as last month, however the fall continues.
Previous drops can be attributed to specific events, like a massive sell-off by large scale investors, or a rush of fake news causing panic on the rumor mill, as was the case recently surrounding the supposed death of Ethereum inventor Vitalik Buterin.
In this week’s situation, it appears the Ethereum price crash is due to a bearish market, reacting in large part to a similar decline in Bitcoin and Litecoin. All the major currencies seem to have passed their peaks for the time being, with some experts suggesting they are returning to a more natural position after a few days or weeks riding a bubble.
Specifically, as of July 10, the price for Ethereum has dropped 18%. This is a significant turnabout from its high of over $400 on June 12 to a present value of just over $200. Its market cap trails that of Bitcoin substantially, at just 57%, and is trailing in trading volumes and total valuation.
Like all the other currencies, including Bitcoin, Ethereum remains stateless. Even with stories emerging daily on the newswires, trumpeting another new corporate or banking adoption of blockchain, the role of these diverse types of “money,” and the very fact that there is such a selection to choose from appears to be keeping the markets hesitant about pushing its value back upwards.
Additionally, there are jitters about the relationship between “cryptocurrencies” and ransomware, bolstered by the fact that constant revisions and forks seem to cast them in a vulnerable light. One can make the same arguments regarding fraud and devaluation in the case of traditional currencies, too, but virtual currencies have yet to establish a sufficient degree of social acceptance.
Where Does It Go from Here?
Investors, miners, and the general public have the same questions at this point. Will Ethereum go lower? Will it rebound and continue to climb? Has it reached its natural level? No one knows for sure of course. But the overarching sentiment, for Ethereum at least, is that it will continue to climb slowly, and that patient investors will stick with it for the long haul.
Some experts seem bullish about league-leader Bitcoin regaining its value and potentially doubling by 2018, and the same applies to Ethereum.
Ethereum is more than a money substitute. It is an open program that is quickly becoming a central pillar of the global blockchain economy. As such, the “money part,” officially called Ether, stands a good chance of riding alongside as the value of Ethereum as a whole rockets upwards.
It is possible that other forms of blockchain technology will emerge to eclipse or simply surpass what Ethereum has achieved. Such is the nature of innovation at high speed. But both ether and Bitcoin benefit from a strong brand presence and confidence that stand to propel its value back upwards over time.
That is, of course, unless another contentious fork or re-adjustment occurs, like two weeks from now.
Watch Out for August 1, 2017
On August 1, 2017, Bitcoin undergoes a coming of age, as its diverse and somewhat fractious communities of developers, investors and programmers undertake a user-activated soft fork to determine some essential procedural rules going forward, primarily around SegWit (a technique for increasing efficacy by stripping away and reassigning the validation procedure from each transaction), and the 1MB/2MB block size decision.
These actions may serve to improve the stability and viability of Bitcoin as a transaction tool, but it also might shine too much light on its change from an ideal centerless money system to one that has the same types of service charges and delays of more conventional commerce vehicles.
Other currencies are coming up fast, taking advantage of the growth of blockchain technology to offer more refined and stable approaches, as is always the way with innovation and competition.
So, although August 1st is a big day for Bitcoin, it will, for the same reasons, be a big day for Ethereum, and other blockchain and non-blockchain based currencies.
So, Is There an Ethereum Price Crash or Not?
Yes, there has been an Ethereum price crash. And a Bitcoin crash. And a Litecoin crash. But they might also be seen not as crashes but as a hangover from some heady days in the spring. The days ahead will be rough for Bitcoin, not only because of the outcome of the August 1 fork, but in dealing with how to explain what it all means to investors and consumers unfamiliar with the workings of it all, not to mention the infighting.
This will likely drag other cryptocurrencies down with it as investors return to more familiar territory, like gold.
However, these are technologies that are in it for the long game. Forks, like price adjustments, clawbacks and stock splits, are part of a continuum. Investors and consumers learn and grow alongside these changes. Nothing, in any area of commerce stands still for long.
So, the likelihood is the current Ethereum price crash is one of many that will punctuate a slow climb upwards, for itself and other currencies whose governance and operational models continue to evolve and mature. The truth is, no one knows for sure.