From $260 billion to $241 billion, the valuation of the cryptocurrency market has dropped by over $19 billion in the past 24 hours, as major cryptocurrencies including bitcoin, Ethereum, Ripple, Bitcoin Cash, and EOS fell by large margins.
For a third day in a row, EOS, the delegated proof-of-stake (PoS) network based on the Ethereum blockchain protocol, has recorded the biggest loss amongst major cryptocurrencies. On June 24, EOS recorded a loss of 13 percent, while BTC, ETH, XRP, and BCH fell 3.5%, 4.6%, 5.8%, and 8.5% respectively.
The decline in the price of EOS can be attributable to a wide array of factors but in summation, the reasons behind the major EOS drop can be shortened to two main components:
Yesterday, CCN.com reported that Cornell professor Emin Gun Sirer and smart contracts pioneer Nick Szabo criticized EOS for its bugs and characteristics that point toward network centralization.
Specifically, Szabo criticized the ability of EOS to suspend user accounts, confiscate funds, and auction accounts if user accounts remain inactive for long periods of time. Szabo stated:
“In EOS a few complete strangers can freeze what users thought was their money. Under the EOS protocol you must trust a ‘constitutional’ organization comprised of people you will likely never get to know. The EOS ‘constitution’ is socially unscalable and a security hole.”
EOS controversy intensified when EOS suspended 27 accounts with no reasons. In a document entitled “Emergency Measure of Protection Order (ECAF),” with abnormal authoritarian wording, EOS team said, “it is hereby ordered that the EOS Block Producers refuse to process transactions for the following accounts and keys indefinitely,” because the 27 accounts did not process transactions for long periods of time.
Prior to the launch of the EOS mainnet in early June, the price of EOS increased from $6 to $23.1, by more than 285 percent. The unexpectedly large increase in the value of EOS led the fall of EOS to intensify, and ultimately led the cryptocurrency to record a bigger loss than other major cryptocurrencies.
In the past month, the price of EOS dropped from $15.5 to $7, by 55 percent within 30 days. Since the price movement of most cryptocurrency and tokens are primarily influenced by bitcoin and Ethereum it is likely that EOS and other tokens will continue to fall in the upcoming days.
The Relative Strength Index (RSI) of EOS remains at 27.8, demonstrating an oversold condition for EOS. But, in a strong downtrend, oversold conditions shown by the RSI is not sufficient to prevent the value of a cryptocurrency from falling.
Throughout April and May, tokens such as Ontology, ICON, and 0x outperformed bitcoin, Ethereum, and almost all major cryptocurrencies in the market. However, influenced by the downtrend of BTC and ETH, even these tokens that have recorded 50 to 100 percent gains in the past two to three months, have fallen by large margins.
If BTC falls to the lower end of the $5,000 region as expected, these tokens will continue to decline, by larger margins than BTC and ETH.
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Last modified: June 11, 2020 1:47 PM UTC