Ethereum (ETH) Down By 80% Since ATH As Cryptocurrency Funds Take A Hit
Since the start of July, the price of Ethereum (ETH) has dropped to levels below the $300 mark as the coin trades at an average price of $272 across major exchanges. This represents an 80% drop from its all-time high when the cryptocurrency boom took place late last year. Despite its efforts on development of its platform and the increasing number of ICOs launched on the platform, Ether continues to plummet to lows last seen in October 2017.
Autonomous Next, a financial researcher, reported a drop in value of its BITA 50 index, which tracks the top 50 cryptocurrencies in market capitalization.
Why The 80% Drop?
The second largest cryptocurrency is going through a torrid period as the price falls day by day but what is the cause of the fall? The report showed that the smart contract blockchain suffered from systemic problems rather than non-systemic ones as the platform improved technologically, the bugs are improved and the applications created have increased since last year.
Other factors creating a conducive arena for Ethereum’s growth include the first-mover advantage and ConsenSys conducting numerous public projects on the platform. These however have not assisted Ethers price to bounce up.
The researching firm offered an explanation as to why despite the positives on the internal protocol, investors aren’t convinced to buying up ETH at the moment.
Problems Facing Ethereum’s Price
The first issue is, the overall market sentiment at the moment is bearish, causing the fall in ETH price. Since the first bear run in May this year, the market has fallen in total market capitalization by over 50%. Despite the continuing developments, investors and institutions seem to be dismissive of these developments and entrepreneur contributions to the platform.
Further, an increasing number of ICOs on the platform has not translated to an increase in use of ETH to raise the funds. The ICOs use a third-party token that is specifically used for fundraising on the platform. This reduced the intended use of ETH altogether, hence reducing the adoption of the coin.
Finally, the current financial institutions, governments and regulatory body’s reluctance to embrace cryptocurrency may also have caused the decline. The SEC has declined proposals to launch crypto ETFs which hurt the adoption process of most cryptocurrencies in the field.
Ethereum, however picks part of the blame as lack of scalability, slow transactions and high fees on the platform, has discouraged many users from using the coin.