After a month of freefall, investors woke up Sunday to experience a rare Ethereum price rise – rare for July, anyway. The markets delivered a dead cat bounce to Ethereum, Bitcoin, and Litecoin, at almost exactly the same minute. Ethereum bottomed out around $135, a shadow of its former self, but according to market watchers, a more realistic representation of its value.
Cryptocurrencies have been riding high during the spring of 2017, buoyed by contagious interest in the market, as well as the growing status of blockchain technology, with banks, companies, and governments the world over taking note of its possibilities.
No one has come forward to claim responsibility for the prolonged fall. There was no mass sell-off and flash crash, in the way that happened June 21. It seems instead that the hangover has set in.
The DG Value Funds were up 2.7% for the third quarter, with individual fund classes ranging from 2.54% to 2.84%. The HFRI Distressed/ Restructuring Index was up 0.21%, while the HFRI Event-Driven Index declined 0.21%. The Credit Suisse High-Yield Index returned 0.91%, and the Russell 2000 fell 4.36%, while the S&P 500 returned 0.58% for Read More
ICOs that once lifted the market left it with little to stand on as speculators cashed out. In addition, worries have been growing over the future of cryptocurrencies, especially regarding the fast-approaching August 1 activation of the Bitcoin improvement proposal. Not only do people not know what will happen on that day, they do know that trading in Bitcoin will be halted temporarily on many major markets, and the fact that these types of things can happen at all erode people’s confidence in the entire technology. And related technologies, including Ethereum, are bound to reflect the developments of that day.
There are worries about scalability and transaction capabilities within blocks, there remains a shortage of actual usable products to which Ethereum can be applied, and the memories of Ethereum’s own fork, following the DAO incident, further spook investors.
The Ethereum price rise of Sunday put a bandage on four consecutive weeks of downward momentum, but experts suggest this behavior appears to be more in line with the effects of a market correction, and that for now, Ethereum and other virtual currencies have returned to a more realistic valuation.
That may be the reason for the mild recovery. It may have found its natural point of buoyancy.
The roller coaster ride gives food for thought as to whether another severe Ethereum price rise could happen in the same way it did in the early months of 2017, when it rocketed towards $400 after months of skimming the ground.
The likelihood is there will be a slower, more gradual rise, but the question may be one of choosing between Ethereum or Ethereum Classic. Both are maturing, but they come with profound ideological differences that go to the root of the immutability of blockchain. Or the market may shift toward a replacement, a more integrated system like Ripple.
Overall these are far too early days. 2017 may be remembered as the year that blockchain and cryptocurrencies broke through into the public consciousness, but the end products – the actual usefulness of both are far from ready. If this was theater, everyone would still be preparing for dress rehearsal – there are lots of technicians and artists running back and forth, and the curtain is not ready to go up for maybe another year.
There will be further Ethereum price rise scenarios to come. It will likely eventually regain and surpass its record value of spring 2017. This week simply demonstrated that as virtual as the technology is, it is subject to the same realities and market pressures as other commodities. Just maybe faster. And more intense. And definitely more exciting.