Ethereum Price Drop Shouldn’t Spook Investors

Anyone tracking the Ethereum price live on July 31 will have seen the 4.62% drop in value to $434.78. However, even as Ethereum price charts continue their bearish trend, the project’s CEO has offered a typically sobering response.

“Is anyone surprised? We’re at the tail end of a crypto bubble,” Vitalik Buterin tweeted on July 31.

Today’s ETH Price Charts Aren’t a Reflection of Ethereum’s Future

If the young Russian is right, the fate of Ethereum, Bitcoin and any other cryptos isn’t in doubt. Instead, what we’re seeing with the latest ETH price drop is a market correction. 2017 was a standout year for cryptos, but such volatility was never going to be sustainable. Much like the dot.com boom saw the value of startups soar in the early noughties boom, Bitcoin’s and altcoins’ rise couldn’t maintain the trajectory it took last year. However, just as online startups haven’t faded into the ether, the likelihood is that Ethereum won’t either.

What investors will have to accept, however, is that cycles are inevitable. For Buterin, this isn’t a problem, nor is it a danger to the future of his project. In his mind, it’s nothing more than the price of Ethereum finding its natural level given its current stage of development. Indeed, when you take a broader perspective, the vast majority of initial coin offerings (ICOs) launch on the Ethereum network. In fact, such as the appeal and accessibility of the ERC20 protocol that Medium.com has written a guide on how to start an ICO on Ethereum in less than 20 minutes.

Sell Now in Preparation for Another Boom

However, as much as this is one of Ethereum’s strengths, it’s also one of its greatest weaknesses. With an estimated 3% of all ETH in circulation being controlled by ICOs, cashouts are always a problem. Whenever a group of ICOs exit the market, the price of ETH can spiral out of control. Unfortunately, in the long term, this threat will remain a cost of doing business in crypto space. But that doesn’t mean the latest intraday trading charts are a sign that we’re witnessing the demise of Ethereum (ETH).

For those playing the short game, the advice is edging towards sell. Beyond the price of Ethereum in dollars, the trend lines suggest the recent bearish sentiment will continue. Looking at the ETH price chart on August 1, a line consistent with the 50% Fib retracement level can be drawn between the $458 high and $411 low. If the price breaks the $411 low, we could see further losses below the $400 mark in the coming weeks. For those living in the moment, speculating on the downside could be the way forward as the bubble nears the end of its tail. However, with developments such as MEW’s update and Coinbase plan to accept ERC-20 breathing new life into the market, the bubble could easily inflate once again.

* Information contained in this article should not be taken as investment advice.