Why is Ethereum’s price dropping?
Ethereum's price plummets well into the $700 range. What caused the sudden drop?
Ethereum's price has plummeted sharply into the $700 range and is still dropping at the time of writing. The immense drop was probably spurred on by two main factors.
The main factor is probably the release of a letter from the treasury department discussing the status of ICO tokens as securities.
Make no mistake, this is a highly consequential interpretation. Accordingly, any group or individual developer who both (A) sold newly created tokens to buyers (i.e. had an ICO) involving U.S. residents and (B) failed to register with FinCEN as a money transmitter, and perform the associated compliance KYC/AML obligations, can be charged under a federal felony criminal statute, 18 U.S.C § 1960, with unlicensed money transmission." - Coin Center
The Ethereum ecosystem is largely dependent on ICOs, with the bulk of them being conducted through Ether. A sudden and severe clampdown on ICOs might see demand for Ether dry up in a hurry. And many who bought Ether specifically for participating in upcoming ICOs may have been abruptly selling them off all at once. This sell off is visible in the sudden price fluctuations on the above chart.
The second reason might be the subsequently unfavourable technical analysis of prices and your everyday panic selling. With prices dropping so abruptly, there probably won't be too many people buying until it bottoms out, which is likely to exacerbate the immediate drop and magnify the impact of this news.
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VEN, XLM, SALT, BTC and NANO.
- SEC crackdown on Binance, Kraken – What it means for Aussie investors
- Sam Bankman-Fried found guilty – what it means for Australian FTX victims
- Bitcoin’s price soars over 10% on ETF rumours – here’s why
- New regulations for Aussie crypto exchanges: What it means for investors
- Sam Bankman-Fried’s FTX trial starts tomorrow – what it means for FTX customers