News that the Chinese central bank had decided to ban initial coin offerings (ICOs) reverberated throughout the cryptocurrency markets on Monday. The People’s Bank of China (PBoC) ruling led to widespread investor panic, leading 95 of the top 100 cryptocurrencies to experience daily price declines. The retreat hit decentralized application (Dapp) platforms particularly hard, causing the NEO, ethereum classic, and ethereum prices to post double-digit declines.
The ethereum price led the retreat, falling nearly 15% after the PBoC declared ICOs illegal and ordered groups to return all token sale funds to contributors.
Ethereum trading volume shot up to $1.3 billion, with heavy concentrations on Bithumb, Bitfinex, and OKCoin. At present, the ethereum price is $291 on Bitfinex, although ETH/CNY has plunged below $280 on OKCoin.
NEO has been nicknamed the “Chinese Ethereum,” so it should come as no surprise that the ICO ban dealt it a severe blow. In early August, the NEO price soared past $50 to bring its market cap across the $2.5 billion threshold. News that the PBoC was considering an ICO ban led the NEO price into decline, although it held above $30 for the remainder of the month.
The official PBoC announcement erased that support, sending the NEO price into freefall this morning. As of writing, the NEO price had dropped by 33% in the past 24 hours, landing at a present value of about $20.
The ethereum classic price had put together an impressive rally toward the end of last week, but it could not weather today’s stormy markets. The ethereum classic price dropped 12%, reducing it to a global average of $16. Its performance is worse on Chinese exchanges, where ETC/CNY pairs are trading at about $15.50.
However, Barry Silbert–whose Ethereum Classic Trust reportedly owns 3.6% of all ETC in circulation–believes the PBoC ICO ban could end up benefiting ethereum classic. On Twitter, Silbert stated that “there could be upwards of $2 billion of ETH held by ICO issuers that may be forced to sell into a weak market.”
He anticipates that this downward pressure will not have a long-term effect on ethereum classic since the ETC platform has not yet served as a central hub for ICOs. Consequently, he predicts that investors interested in smart contracts could grow disenchanted with ethereum and turn to ethereum classic as a Dapp vehicle.
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Last modified: May 21, 2020 9:16 AM UTC