For the majority of most people in the crypto community, FUD is their least favourite topic. I’m not attempting to add to it here; there’s enough around as it is at the moment. With that being said, I do have a few queries rumbling around my head about some worries I have for Ethereum. I don’t know the answers to the questions I’m posing. I’m just thinking aloud.
In 2017, in the middle of a gigantic bull run, we saw what is now known as the ICO craze. New companies were being created out of thin air—some with legitimate plans, some with more than questionable ideals. The process would be as follows. Companies release a white paper, go on a frenetic marketing campaign, then release your coins to the general public and watch the Ethereum roll in. Tezos and Filecoin were two that raised over $200 million each. FUD was minimal to say the least.
Such amounts were flexible though. The amounts raised depended upon Ethereum’s price at the time. If Ethereum is trading at $200 at the time of the ICO, but then is worth $250 just a week later, then the amount raised could be a lot more. Of course, this depends on how quickly the company has traded their Ether for fiat. The other caveat is when they held their ICO; if it was held at the top of Ethereum’s price rise or near the bottom.
The conundrum faced by many ICOs is when do they sell their Ether for fiat or whether they do at all. If they held through this bear market, then their funds have been dramatically depleted through market fluctuations. This could then lead to further downward pressure on the price of Ethereum as more ICOs need to sell their initial funding to stay afloat. However, the removal of many ICOs from the market could be a net positive. By extracting the poison now, taking the rough hit, Ethereum could come out stronger in the end.
Like the rest of the crypto space, we are all wondering where the bottom will be. Most people are focusing on the Bitcoin bottom, but Ethereum is just as interesting at the moment. The $100 mark for Ethereum is an important psychological support level. So far, it hasn’t been breached, but whether it can sustain this support will be telling.
ICOs have also brought another unwanted issue. The SEC crackdown that we have reported on over the past week has added further pressure on the Ethereum platform. The crackdown has long been suspected to be coming by many in the space. So far, we have seen a couple of individual shutdowns, but the SEC will expand much further as they attempt to grasp the scale of the situation. Again, this can be viewed as a positive depending on your viewpoint. Unfortunately, there have been too many shady ICOs who’s idea of a product is non-existent, but instead spends money on marketing through an A-list celebrity.
Ethereum is currently just floating above the $100 level (at the current time of writing). This could prove to be a key psychological support. If Ethereum reenters double-digit territory further, fear and uncertainty could be on the horizon. For those who have been in the crypto space for a longer length of time however, a further drop might offer the perfect buying opportunity.
There is never a dull moment in crypto. Ethereum’s near future is going to be fascinating to follow. The news for the near future appears to be at a pivotal bear market precipice. However, the struggle that Ethereum suffers now could allow the platform to come back stronger and wiser. As I stated at the beginning, I’m not attempting to FUD Ethereum. Rather, I’m just asking pertinent questions that are floating on the horizon.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.