Why Is Ethereum Dropping?
BUZ INVESTORS Ethereum Crashing An Ethereum flash crash, an internet hoax, and something called Segregated Witness. What do they have in common? Simple. They all answer one question: “Why is Ethereum dropping?” But it’s equally important to remember what question they don’t answer. Namely, “Is Ethereum a good investment?”
Separate these two questions in your mind, because they have nothing to do with each other.
We know, for instance, that an Ethereum flash crash began when one investor sold off a ton of ETH tokens. This single move triggered a cascade of stop-loss orders and margin liquidations.
The Internet Strikes Again
Unlike Bitcoin, Ethereum’s founder is a well-known guy.
His name is Vitalik Buterin. As something of a prodigy, Buterin invented Ethereum at the age of 19. He also won a Thiel Fellowship (a $100,000 prize that billionaire Peter Thiel gives to kids to get them to drop out of university), which convinced him to pursue Ethereum full-time.
“Vitalik Buterin confirmed dead. Insiders unloading ETH,” the post read.
But it didn’t stop there.
“Fatal car crash. And now we have our answer,” the post continued. “He was the glue. It will be difficult for ETH to recover and the entire crypto sphere is in big trouble.” (Source: “Vitalik Buterin confirmed dead. Insiders unloading ETH.,” 4chan, June 25, 2017.)
If there was any bullishness after the Ethereum flash crash, it was burned to the ground.
The “New York Agreement” Causes ETH/BTC Rotation
The third factor dragging ETH prices down is the “New York Agreement,” otherwise known as “SegWit 2x.” These are actually Bitcoin protocols that will impact the BTC price prediction, agreed upon at a recent New York summit.
Hence the name.
We could delve into the technical details, but the long and short of it is this: Bitcoin needs to increase its transaction speed.
When you lay this fresh optimism on Bitcoin next to the bearishness on Ethereum, an ETH-to-BTC rotation begins to play out. Money appears to be flowing out of the former and into the latter. Perhaps it is also because we saw an Ethereum backlog recently.
Investors had assumed that Ethereum was going to avoid the pitfalls that plagued Bitcoin, but it was not to be. The cryptocurrency also ran into scaling issues. However, it does not have an arbitrary limit on block sizes, so we should see ETH prices recover quite soon.