Ethereum is not seeing a nicer of fates lately, as we witness it plunging down deep under the $300 bound. Though the cryptocurrencies have always been notorious for displaying a rather irregular fashion, the devaluation of ether is enough to leave the analysts ablaze.
Analysts and enthusiasts have always conjoined heads discussing a smooth, comprehensive path that they theorize for cryptocurrencies to follow but the sheer drudgery has never led them to success.
Ether lost such a value out of the blue?! Wait till you hear the making of the calm before the storm.
CNBC reported an abrupt case like this one for ether about a month ago, stating the decline or a ‘flash crash on the GDAX exchange’. Though analysts see the crypto charts always rising, sometimes a minute fall is always on the table. Ethereum, the third most popular cryptocurrency in the virtual monetary world, has been busy garnering lots of investors and providing a pathway to successful dealings for quite a sometime. But the previous decline from a mark of $319 to mere 10 cents saw many investors running off with their capital or while some were ignorant enough to eventually witness their investments drain off with the gigantic decline.
The downfall of the humongous market had at the time ignited the blame game among the analysts, as they were sharp to pick out the loose ends while some were just throwing random comments to display their anger for the abrupt devaluation. Investigations were initiated in order to pick out the adversities and some actual culprits if that was the case but as stated by Adam White, the Vice President & General Manager of Coinbase, besides supporting the fact that the investigations were as pure as one can possibly consider,
Our initial investigations show no indication of wrongdoing or account takeovers. We understand this event can be frustrating for our customers. Our matching engine operated as intended throughout this event and trading with advanced features like margin always carries inherent risk.
The investigations were continued to entertain the questionnaires with White continuously assuring the customers and investors, every detail that they dig up on the matter.
We are continuing to conduct a thorough investigation and will keep customers updated with any resulting actions.
The trade for ether to USD was put to rest for the time being as the investigations authorities were busy digging up any chance that there might be some dirt under the obvious irregular trend. Though the case was viewed as drastically serious with people anticipating a scam, nothing was found just a mere play of the financial matters which White put as,
A multimillion dollar market sell was placed on the GDAX ETH-USD order book. This resulted in orders being filled from $317.81 to $224.48, translating into a book slippage of 29.4%. This slippage started a cascade of approximately 800 stop loss orders and margin funding liquidations, causing ETH to temporarily trade as low as $0.10.
That is the perfect answer to why ether went down under the prior level, I guess most of us would agree. Well, some are sharp to pick out the underlying facts sooner than the other party can make their side’s loose-ends free
Which user did it? Nobody makes a multi-million $ market sell order, unless they have an intention to manipulate the market.
— Boban Milošević (@bobanmil) June 22, 2017
The trade was open for regular operations again, but a few people could have imagine that there was worse in store for ether as we inch the mid of August. The adverse effect was not even imaginable as the month took start but the coin plummeted deep down a mark, to about nearly half as low as the monetary trend we saw at the end of the previous month. The market suffered a huge loss in a similar fashion to what transpired prior titled, the havoc out of sell orders as we see ether fall off 44%. The recent charts for ether have been the lowest, as per the chart for the year as the November massacre started off with a blow to the ethereum head to begin with.
Is Ethereum destined to eventual demise, one might ask.
The critical school of thought is always there to support the negative cause for a thing under consideration, but the underlying facts might lead us to the exact ether apocalypse as per the recent trend. Though there may be some pure-finance situations on the go right now with ether but the fact clouding the entire gloomy night for cryptocurrencies can just direct us on a single way. Cryptocurrencies though have been breakout stars for a specific period of time, escalating either as a trend or as meaningful use for successful transactions without the risks for a third party, scammers and fraudulent agents that have been continuously undermining the crypto market. This turns out to be the sole reason why the incumbent authorities have not been keen over promoting the crypto market to be used worldwide as global currencies. Though this might be true to some extent, the recent devaluation was not that harsh with other cryptocurrencies as we see bitcoin plunge down, losing merely 6% of its current market value.
Are ICOs the Nascent Criminals?
This still leaves the room to delve into the financial talks relating to the ether demise with some folks blaming it over the ICOs. While ICOs are successful in bringing in capital from the outside world, this is not the case every single time. It also means the finance already inside the crypto market to be prone to moving out to ICOs. This can turn seriously drastic as one can reserve a huge amount of capital for selling of the ether tokens, with the ones conducting the token sale eventually exposing the capital on to the exchange market giving form to a gigantic sell order.
Eric Wall, an analyst and the head cryptocurrency researcher at fintech company Cinnober, talked his mind the same exact way stating that similar projects have raised a huge amount of capital in ethers eventually ‘dumping’ it off into the exchange market, which might not seem wrong at all but what it does is create a chain effect, the end of which is the ‘drained off’, ‘devalued’ dead end.
The problem when you give millions of $ETH to $ETH competitors is that they can unload the $ETH on the spot market and short $ETH on the futures market before that, so they’re not only securing the funding but also manipulating the underlying spot market in favor of their shorts.
— Eric Wall (@ercwl) August 13, 2018
Controversies can ignite a well-structured system to fall victim to well-orchestrated tricks. If the cryptocurrency is to reinstate itself a the top virtual asset, it sure needs a rude awakening but the dark side of the story is, this rude awakening has not insisted the platform to install factors fighting back, rather treads the path leading astray.