The price of Ether, the token for the Ethereum blockchain network, has provided ample evidence that cryptocurrencies are an incredibly fickle market. Last week, the prices of most major cryptocurrencies fell by about 20% on average in a significant market correction. Then, after recovering somewhat, false reports of the death of Ethereum's founder, Vitalik Buterin, spurred another plunge in value. Then, at the beginning of this week, Bitcoin's primary rival dropped by another 20.9%, ending Monday at a value of $239.63. As of this writing, the price of Ether is hovering just under $300. What are the reasons for these changes, and particularly the sudden drop in value at the beginning of the week?
Efforts to Boost Confidence Following Flash Crash
Coinbase, one of the world's leading cryptocurrency exchanges, announced plans to credit customers who "experienced a margin call or stop loss order" on its popular GDAX exchange following last week's crash. GDAX saw the price of Ether plunge from $300 to about 10 cents. Then, GDAX announced a temporary halt in trading for all of its products earlier in this week. This issue was resolved within an hour's time. The result was that Ether traded down more than 20% by the end of Monday, arriving at a final trading level just around $240 per token.
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What Caused the Ethereum Price Crash This Week? By Nathan Reiff | June 30, 2017 — 11:24 AM EDT
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The price of Ether, the token for the Ethereum blockchain network, has provided ample evidence that cryptocurrencies are an incredibly fickle market. Last week, the prices of most major cryptocurrencies fell by about 20% on average in a significant market correction. Then, after recovering somewhat, false reports of the death of Ethereum's founder, Vitalik Buterin, spurred another plunge in value. Then, at the beginning of this week, Bitcoin's primary rival dropped by another 20.9%, ending Monday at a value of $239.63. As of this writing, the price of Ether is hovering just under $300. What are the reasons for these changes, and particularly the sudden drop in value at the beginning of the week?
Efforts to Boost Confidence Following Flash Crash
Coinbase, one of the world's leading cryptocurrency exchanges, announced plans to credit customers who "experienced a margin call or stop loss order" on its popular GDAX exchange following last week's crash. GDAX saw the price of Ether plunge from $300 to about 10 cents. Then, GDAX announced a temporary halt in trading for all of its products earlier in this week. This issue was resolved within an hour's time. The result was that Ether traded down more than 20% by the end of Monday, arriving at a final trading level just around $240 per token.
All of these shifts don't change the fact that Ether is up by about 2,500% for the year, according to CNBC. The token is only up by about 2% for the month of June. At its highest levels, the token had surged in price by more than 4,000% since the beginning of 2017.
Buterin Death Rumor Impacted Value
Sunday's unsubstantiated news report that Vitalik Buterin had died in a car crash, later proven to be a hoax when Buterin tweeted a picture of himself, also prompted a smaller dip in Ether's price. The token fell from about $329 to around $284 that day. William Mougayar, the author of "The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology," believes that it's more complicated than just a rumor. "These cryptocurrencies are traded globally, especially with a large amount of activity coming from China...we need to see a full 24-hour cycle in order to fully assess what is actually happening," he explained.
Digital currency investor and partner at Union Square Ventures Fred Wilson has been one of many analysts to suggest that a major selloff in the crypto sector is impending. Nonetheless, Wilson remains hopeful about the future of these currencies over the next five to 10 years. Other analysts, including those at Aberdeen Asset Management, believe that the dramatic rise of currencies like Bitcoin and Ethereum is fueled by mere speculation, and that a bubble collapse may be likely.
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