Ethereum has been experiencing a downward trend in its price, and analysts have presented many possible explanations regarding why the cryptocurrency is performing negatively. The crypto asset’s price trends have been closely mirroring those of Bitcoin on the aggregated crypto markets, and some believe that the leading cryptocurrency has been responsible for Ethereum’s price falls.
Recent data shows that Ethereum may be suffering as a result of generally weak price action. The weak price action may be exerting high sell pressure on Ethereum holders, and this would cause a price fall for the crypto asset. Initial coin offerings (ICOs) have been performing treasury sales of Ethereum, and this is likely one of the forces pushing the cryptocurrency downwards. These ICOs hold a significant amount of Ethereum and when they let these holdings go, the cryptocurrency shows high sell rates. For any crypto, high sell pressure translates to a price fall, and this has been the case for Ethereum currently.
The selling pressure on Ethereum has forced the cryptocurrency down to $173.70 from its previous highs of $220.00 that the asset reached during mid-September. When compared to its performance in June, the current price reveals the bearish run that Ethereum is currently on. June saw the crypto asset reach it’s all year high of close to $350, which saw it become one of the best performing cryptocurrencies all year. These numbers make the current price drop look more grimish, and if the selling pressure continues over the next few weeks as expected, Ethereum will likely fall to close to the $150 mark.
According to data from Diar, Ethereum has fallen by 77% since is 2018 highs, and this fall has come at a time when ICOs are selling large amounts of the crypto asset. Several of the ICOs that sold vast amounts of Ethereum were conducted in 2018, and this trend has continued into 2919. November and December 2018 particularly saw high amounts of Ethereum being sold by major ICOs, and this sell-off period coincided with the bottoming of the crypto market.
Analysts expect that the selling pressure on Ethereum will continue due to the fact that ICOs still hold close to 50% of the Ethereum tokens that were raised during various token sales. The wallet balance for ICOs stood at over 4.6 million ETH in January 2018, and currently, they hold over 2.2 million ETH. If the volatility being experienced in the markets continues, these ICO projects can be expected to continue to seek their holdings. Given that they are in possession of a significant amount of the token, the current bearish trends will continue in the near to mid term.
The pressure to offload holdings is not limited to Ethereum at this point. Bitcoin is also facing high selling pressure which is part of the reason why its price has tumbled. The perception that Bitcoin is a safe haven asset seems to be wearing off and investors’ interest in the cryptocurrency has dropped. It is also expected that Bitcoin will continue to suffer in the near to mid term as a result.
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