What is the Reason for Ethereum Leads the Price Drop?


Last year, Ethereum became a star cryptocurrency, and its price performance exceeded Bitcoin. But by this year it is completely different. This second-largest digital asset (ethereum market cap ranked second) has fallen nearly 76% this year. Yesterday, the price of Ethereum has fallen below $200, and the patience and mood of investors have been greatly destroyed.

Bitcoin can provide a global financial network, while Ethereum brings a computer network. Ethereum is like a car's petrol. Developers can view its token (eth coin) as a fuel for implementing certain functions on the blockchain.

Last year, when people saw more and more ICOs, they are naturally optimistic about the Ethereum value, and Kyle Samani, a partner of cryptocurrency hedge fund Multicoin Capital, said that the price of Ethereum fell this year because of the actual results of these projects are not in line with investors’ expectations.

Ethereum Competitors

Ethereum does have a first-mover advantage, but it also bears a heavy burden. For example, EOS from the Cayman Islands is home to the "Ethereum Killer." The project raised $4 billion. it has invested a large amount of money to fund developers to build applications on the EOS network, thus reducing the number of Ethereum developers.

Ethereum Faces a Crisis of Trust

Ethereum is facing a crisis of investor trust because it cannot achieve rapid expansion in a fiercely competitive environment. In addition, its DApp has not been fully popularized, both of which have a negative impact on the price of the ERC20 token and this market. The critics of Ethereum also expressed dissatisfaction with the capacity and speed of the blockchain.

FUD - Fear, Uncertainty and Doubt

FUD is an abbreviation familiar to cryptocurrency enthusiasts. Some experts believe that this sentiment is the main factor causing the Ethereum to fall. A lot of FUD sentiment was spread in the market, saying that Ethereum will die, which eventually led to panic selling.

Looking at Ethereum from Relative Value

From January to December last year, btc to usd price rose from nearly 800 US dollars to nearly 20,000 US dollars, the price has increased nearly 2.5 times, and Ethereum has risen from the price of 8 US dollars at the beginning of last year to the highest point of nearly 1,400 US dollars, the price has increased nearly 175 times. Ethereum is a better choice in this point at that time. However, these two cryptocurrencies are currently difficult to stabilize. Bitcoin fell 54% this year, and Ethereum fell even more, reaching 76%.

Although some investors have begun to search for the next Ethereum, I think the price drop may be a chance for investors who have the patience to buy ethereum. After all, this is a relatively stable technology.