Why the Ethereum Price has Dropped: Speculations and Dipsโ€‚by@juxtathinka

Why the Ethereum Price has Dropped: Speculations and Dips

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Juxtathinka

Tech

Table of Contents

  1. What is Ethereum?
  2. How Did Ethereum Come About?
  3. Ethereum Controversy
  4. Notable Dips: How Far Ethereum Has Fallen In The Past
  5. Why Ethereum is Going Down: The Speculations and Dips

What is Ethereum?

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Ethereum is an open-source decentralized cryptocurrency platform that has its programming language (Solidity) and its cryptocurrency (Ethereum or Ether). Ethereum provides users all over the globe the opportunity to create, monetize and use decentralized applications (dApps) on its network while using Ether as payment. The platform enables users to make payments and receive funds whilst using Ether for gas fees, from the comfort of their homes.ย 

Ethereum is one of the biggest things to happen to the world of digital payment and it is mentioned in almost every cryptocurrency conversation in addition to Bitcoin and Litecoin.ย 

For this discussion, Ethereum or Ether(ETH), which is the cryptocurrency owned by Ethereum, is the major focus of our analysis.

Ethereum is the second most popular cryptocurrency coin with a market value of 1ETH hovering around just over $3000 USD. The price of ETH varies from time to time.

A Brief History of Ethereum

In 2013, a Russian-Canadian entrepreneur and programmer named Vitalik Buterin released a whitepaper about an alternative platform to Bitcoin that would have a design for any type of decentralized platform that developers would want to build.

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Buterin became a 2014 Thiel Fellow and he won a $100,000 grant to work on what would become Ethereum. Together with his co-founders: Mihai Alisie, Anthony di Lorio, Amir Chetrit, Charles Hoskinson, Gavin Wood, Jeffery Wilcke, and Joseph Lubin, he set to work. A crowd sale began and $18,000,000 was raised to set the ball rolling.

In late July 2015, the first version of the Ethereum protocol called Frontier was released. However, it was not until August 2015 that ETH was added to the Kraken Exchange platform at $2.77 per coin.

Initially, ETH fell to less than a dollar before maintaining a general value of between $1-7, then $11 in 2016. However, in 2017 as more investors trooped in to invest, ETH was able to reach between $650-750.

Through the years, Ethereum has had its rises and falls: in 2021, it rose steadily until a massive dip between May and July which amounted to a whopping 60%.

Ethereum Controversy

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In early August of 2021, the Ethereum platform had a new update: The London Hard Fork. The London Hard Fork is a set of five new Ethereum improvement proposals(EIPs).

The EIP-1559 is the EIP most talked about: the software upgrade involves "burning" gas fees and indirectly reducing the income of Ethereum miners.

This update did not go down well with some Ethereum enthusiasts, but the aim of the London Hard Fork is to reduce the exorbitant gas fees, especially since the NFT purchase spike.

Unfortunately for the Ethereum miners, the gas fee price which was a major source of their income is being slashed by the new update: it is speculated that in years to come ETH mining might become redundant.

Notable Dips: How Far Ethereum Has Fallen in the Past

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In June 2017, the price of ETH dropped from $319 to 10 cents within seconds after a multimillion-dollar trade. Traders lost thousands of dollars, but any lucky buyer who got ETH at the 10 cent mark up made millions.

August 2018 saw Ethereum fall to a price below $300. Investors lost a lot of money, while traders who bought the dip made a lot of profit in later years. Then, Ethereum was down by 78%, far away from the high price of over $1,000.

In March 2020, ETH fell to as low as $1850 in one day. The loss came after China banned financial and payment platforms from providing cryptocurrency services.ย 

July 2021 showed how low the price of Ethereum could go. ETH went below $2,000, but luckily it is now over $3,000.

Why the Ethereum Price has Dropped: Speculations and Dips

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Ethereum goes hand in hand with Bitcoin; it is the second most popular coin. However, its attachment to Bitcoin comes with a disadvantage: Bitcoin dips often result in Ethereum dips.

In early August 2021, the new US Stock Exchange Commission Chairman, Gary Gensler said in a Bloomberg interview that he had asked Congress for a law that allows the SEC to monitor crypto exchanges.ย 

The governments of different countries are making more laws and setting more restrictions on cryptocurrency transactions. Ethereum is not spared: with these restrictions, there is a reduced number of investors, miners, and traders on the platform.

There are speculations that the new Ethereum update will continue to increase the price of Ethereum, but the diminished mining incentive is a cause for concern. If some coins are burnt, the supply of ETH will be reduced and the price will be higher. However, if mining is reduced and the coins are held by investors who want to hold, ETH could become inaccessible.

Ethereum falls because of many factors: new policies, market changes, and large buys are some of the reasons why Ethereum is going down. However, if you want to buy ETH, buy during those dips and hold your coin tightly until the price rises significantly.ย 

DISCLAIMER: The opinions in this article belong to the author alone. Nothing in this article constitutes professional investment advice. Please do your own thorough research before making an investment decision.

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