According to cryptocurrency analyst Eric Thies, the crypto market may have hit a bottom in September as the price of Ethereum (ETH) declined by more than 50 percent.
Since delving below the $180 mark, ETH has since recovered to $230, likely due to the demonstration of massively oversold conditions by the market in late September.
ETH Enabled ICO Bubble, Which Led to Crypto Bubble
Throughout the third and fourth quarters of 2017, interest and demand for initial coin offering (ICO) projects hit an unprecedented level. Blockchain projects raised significantly more capital through token sales than from venture capital firms.
TechCrunch exclusively reported that ICOs raised 3.5x more capital than VC-backed startups in the blockchain sector. Jason Rowley wrote:
“Over the past 14 months, blockchain and related startups have raised nearly $1.3 billion in traditional venture capital rounds worldwide. But for the ICOs Crunchbase has captured, nearly $4.5 billion was raised via ICOs.”
Thies stated that the massive growth of the ICO sector contributed to the mid-term rally of the crypto market as it achieved an all-time high valuation of nearly $900 billion.
“Bitcoin’s run in the end of 2017 was fueled by a massive ICO (ERC20) bubble and therefore indirectly fueled via ETH. .Meaning that ETH capitulating in early September was significant to ending the bear market. We were all looking in the wrong place, expecting BTC to do it.”
Bitcoin has declined from $12,000 to $6,000 in early February amidst a bear market, and Thies stated that the end of the capitulation of Bitcoin was when the dominant cryptocurrency consistently started to demonstrate a high level of stability at the $6,000 mark.
“BTC parabolic continuation into mid-December was due in-part to the $BCH fork from August. Those with high amounts of BTC now had freeplay money to throw at whatever ICO was on the come up. BCH has also capitulated, while we were once again looking elsewhere. The third factor is $USDT and the enormous influx of liquidity coming into the market via exchanges, etc.,” he added.
Since then, Bitcoin, Ethereum, and the rest of the cryptocurrency market have stabilized in a low price range, which could allow the market to collectively initiate a short-term rally.
Many Experts Believe Crypto Has Hit a Bottom
Billionaire investor Mike Novogratz famously stated in early September that Bitcoin has bottomed out at $6,000. ShapeShift creator and CEO Erik Voorhees emphasized that while the bear market is not over, it is a viable period for investors to accumulate because it is difficult for BTC to decline below its current level.
Technical indicators have suggested that the market is bear biased, with Bitcoin demonstrating its lowest yearly volume over the past seven days. But, given the positive developments in the cryptocurrency sector and the stability BTC has shown throughout the past two months since early August, it is entirely possible that the bottom of the crypto market has already been established.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: March 4, 2021 3:47 PM