In terms of market capitalisation,
Ethereum (ETH) is the world’s second largest cryptocurrency – by a lot – around US$20 billion next to its nearest rival,
Ripple. ETH has quickly become the blockchain of choice for ICO’s, software developers, and programmers. Yet, Ethereum has significantly underperformed its counterparts during the later stages of this year’s first quarter.
It started as the best performer of the first quarter, having only lost 41%. However, in March alone, the price fell by a huge 54.9%, making it the weakest performer in comparison to the top five cryptocurrencies.
One of the reasons that Ethereum is so popular is because it’s just so flexible and efficient, which is why these latest statistics seem so odd. Just a couple of weeks ago, ETH investors got a bit of scare when Ethereum developer Vitalik Buterin threw around the idea of charging fees to those who stored data on the network.
Jeff Koyen, President of
360 Blockchain USA, says Ethereum was badly affected by some unexpected results:
“The irony, of course, is that crypto is facing many of the same problems of many traditional start-ups. It’s a victim of its own success – you can grow at a loss for only so long. Someone has to pay the electric bill.”
On top of this, Ethereum is facing the same regulatory threats as other cryptocurrencies, as well.
Jay Clayton, Chairman of the
U.S. Securities and Exchange Commission said:
“I want to go back to separating ICO’s and cryptocurrencies. ICO’s that are securities offerings, we should regulate them like we regulate securities offerings. End of story.”
Many ICO’s have been labelled as scams in the past few months, creating a great deal of distrust and uncertainty, which has ultimately affected the value of all cryptocurrencies. Another issue Ethereum faces is the selling pressure that comes from the successful ICO’s.
Tim Enneking, Founder and Managing Director of
Crypto Asset Management, said:
“It’s the live companies that have the Ether, not the failed ones….These companies have expenses in fiat and are having to sell Ether to pay for them. They aren’t great traders and selling it into an already falling market is exasperating the fall.”
At press time ETH is up a little more than 4 percent over the last 24-hour period, trading at around US$406.