Ethereum appears to have entered a bear market with price falling by more than seven percent today.
The catalyst seems to be last week’s accidental hardfork where ethereum’s blockchain was split into two due to a bug that caused eth’s two main clients, Parity and Geth, to lack consensus. It was the fourth hardfork of the network in just as many months, beginning with the DAO fork on the 20th of July 2016.
Although price quickly began to gain appreciation after the DAO fork, the surprise listing of ETC by Poloniex returned chaos to the market, with the tense period of two weeks giving way to a slow decline of ETC and a gradual appreciation of ETH, up to Devcon2’s opening in September.
Since then, price has experienced a steady decline with no bottom in sight as an attacker exploited a bug that nearly brought the network to a halt. The developers recommended that there should be two forks to fix the bug, with one carried out in October and another this month which led to last week’s accidental fork.
That last fork may have been too much for the barely nascent network, seemingly shaking confidence as investors wonder whether further complications are to be expected. Overall sentiment, therefore, seems to have turned bearish, with the community probably waiting for some level of stability at the protocol layer.
Another reason may be a slowdown in new DApps or eth based projects with most of them launched during or shortly after Devcon2 when 700 attendees were showcased the ethereum ecosystem. One interesting yet to be launched project, however, especially in light of Reddit and Twitter censorship as well as tampering of comments, may be Akasha, which incorporates eth for voting. Mihai Alisie, Akasha’s founder, publicly stated in giving an update:
“[W]e’ve made tremendous progress and everything is coming together really nice – this week we ran tests on the MacOS and Windows. The dapp works on Linux and Windows but we are working on a few kinks related to the MacOS release. The final steps related to the cross-platform pre-alpha tests are now in motion.”
A third cause for the price decline may be bitcoin’s appreciation in light of monetary mismanagement by authorities in China, India, Venezuela, Zimbabwe, Nigeria and other countries. Traders, therefore, may have sold declining eth for appreciating bitcoin, further contributing to the trend in both.
That all said, after a euphoric spring, chaotic summer, and somewhat productive early autumn, it may well be the case that investors now just want a calm winter, and wait it out for the protocol to show stability as well as the return of the more ambitious projects which makes us once more dream of a world of machine to machine payments, owned by individuals scattered across the world through smart contract ruled tokens.
Featured image from Shutterstock. Charts from Poloniex and Tradeblock.
Last modified: May 21, 2020 10:11 AM UTC