Categories: CryptoNews

Ethereum Price Drops Over 20% in 24 hours

The Ethereum community is not too happy with Ether’s price performance. At one point today, Ether was down 25% compared to a day ago. Some of those losses have been recovered already, but the popular currency is still down by just over 15%. Although Bitcoin also lost some of its value, its losses were far less severe. What is going on with the Ethereum price right now?

Ethereum Price Gets a Massive Correction

Before people start to panic, it is important to remember the Ether price was well below $45 three months ago. Ever since that time, there has been a massive Ethereum price increase, which made the value spike to $403 at one point. That is a 900% increase over the course of two months, with no obvious reason to even warrant such a price trend whatsoever.

Granted, the Ethereum Enterprise Alliance was announced, and a lot of prominent partners have joined this initiative ever since. However, that alone does not warrant a price increase for the Ether token itself, as no one knows how many- if any- of those partners will even use it for their projects. Cryptocurrency prices are mainly inflated by hype and pumps based on an announcement, rather than actual progress. It appears the EEA announcement has gotten people quite excited.

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Unfortunately for Ethereum, such an aggressive bull market cannot be sustained unless there is something to show for it. That being said, the Ethereum ecosystem has shown us many things since that price spike in June of 2017. Sadly, not too many of the things we have seen are healthy for the ecosystem. Network congestion, smart contract issues, and an influx of cryptocurrency ICOs selling nothing but vaporware are starting to have an effect on the Ethereum price.

That is not all, unfortunately. MyEtherWallet has been suffering from phishing sites impersonating this platform over the past few weeks. It is unclear how many people have fallen victim to this phishing campaign, but it is believed several hundreds of thousands of US Dollars worth of Ether and ERC20 tokens have fallen into the wrong hands. All of those currencies will be dumped on the market, creating more selling pressure across exchanges.

We recently learned there is a major issue with ERC20 tokens. Anyone owning ERC20 tokens can -in theory- send them to a contract not designed to accommodate tokens. If that were to happen, these tokens are lost forever. So far, around $400,000 worth of tokens has ended up in unknown places. Recovering them is virtually impossible, which is why the ERC223 standard needs to be introduced sooner rather than later. Once again, not the best of PR for Ethereum and its underlying technology.

Taking all of these problems into account, it is anything but surprising to see the Ethereum price correct itself. While no one expected such a massive collapse this quickly, an ETH price of over $250 is overvalued. Some people feel Ether is used only for gas -as a transaction cost- and partaking in cryptocurrency ICOs. There is also an ecosystem filled with Dapps, which will make use of ETH in one way or another. However, the average person will not be too passionate about those things, until a “killer app” is developed.

JP Buntinx

JP Buntinx is a FinTech and Bitcoin enthusiast living in Belgium. His passion for finance and technology made him one of the world's leading freelance Bitcoin writers, and he aims to achieve the same level of respect in the FinTech sector.

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