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3 Factors Causing the Ethereum (ETH) Price Decline

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Early in January this year, Ethereum price hit $1,400, then crypto-world entered in a bear market and like other cryptocurrencies ETH price had considerable loses. At the time of writing Ethereum is changing hands under the $200 price. The digital currency has hit a decrease of about 85% (compared to its top price) on 12th of October hitting $189. The dip was caused by some fake news about Goldman Sachs halting plans for a Bitcoin and cryptocurrency trading desk.
It is important to remember that Ethereum was trading at around $300 the last year in the same period.

3 Factors Influencing Ethereum Price

Many reasons have been speculated in the crypto world about the Ethereum price decline by 85% in 9 months. Let explore this factors the community think are behind such a decline.

ICOs sell-off

There is a theory circulating around about the ICO companies liquidating their ETH. It is important to remember that the ICO boom was between November 2017 and March 2018. In November 2018 ETH price was $300 and in January the price topped at $1400 then in March the price declined to $700. It is reasonable to think that those ICO companies holding considerable amounts of ETH decided to liquidate their ETH holdings to prevent more losses.

Network scalability issues

Another reason for the Ethereum weakness might be the scalability problem. All we remember the crypto kitties ethereum network congestion. A single DAPP slowing down the entire Ethereum network which is supposed to be a supercomputer that can’t be slown down.

The Ethereum community is due for a network upgrade to solve the scalability issues network has. Ethereum’s core developers had scheduled a hard fork this October that later has been postponed at the beginning of 2019. Known as Constantinople, the software program upgrade is supposed to change the network from a Proof of Work to a Proof of Stake network. The put off has caused a negative sentiment to traders and investors who have possibly sold part of their holdings to avoid further losses. Other have shorted ETH to get short-term gains.

Competition from other blockchain projects

Another factor that caused Ethereum weakness might be the emerging of competing blockchain networks that have better infrastructure and perform faster with lower fees.
While Ethereum can handle 25 transactions per second. TRON – another platform for DApps- can handle 2,000 transactions per second.

On 12th October TRON activated the Tron Virtual Machine and the network exploded since that with more DApps being created every day on the platform. The necessity to scale the Ethereum network has never been so urgent like now.

Making a summary of the 3 reasons causing the Ethereum price drop:

  • ICOs selling their ETH in a bear market to prevent further losses.
  • The delay of the Constantinople hard fork causing negative a psychological effect on investors.
  • Competition from other Blockchain projects that are more efficient.

On the other side, looking closer at the ETH situation right now, it might be a good opportunity to buy some cheap ETH. Many people were thinking the last year in December and then in January too if they had the opportunity to buy Ethereum when it was cheaper. Well, this is the time when Ethereum got cheaper again and accumulating some before the starting of the uptrend might be a good idea.

What is your opinion about the actual price of Ethereum? Please post your thoughts in the comments below.


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