Did Ethereum Bottom Out at $170? Worst Part of ETH Drop May be Over

On Sept. 12, Ethereum (ETH) dipped below the $170 mark, dropping to $166 to hit its lowest point of the year. Since then, within a 30-day period, ETH has shown promising recovery in its volume and momentum, rebounding from $166 to $230. Last week, on Sept. 23, the Ethereum price achieved $255.

The unexpectedly rapid growth of the initial coin offering (ICO) market in mid-2017 led many analysts to speculate that the price drop of ETH was largely triggered by the sell-off of Ethereum holdings by blockchain projects that have raised millions of dollars through public token sales. Diar, a cryptocurrency research group, revealed in its weekly report that ICOs still hold more than 38 percent of the amount raised in their token sales. At the time, based on the findings of Diar, analysts speculated that if ICOs decide to liquidate their remaining ETH holdings, the price of Ethereum could decline further from its low support level.

However, on October 1, BitMEX Research, a subsidiary of major cryptocurrency exchange BitMEX, released a study entitled “Ethereum holdings in the ICO treasury accounts,” listing the holdings of ICOs and the estimated balance sheet of major blockchain projects. The paper of BitMEX Research emphasized that most ICOs liquidated their holdings when the price of ETH was still at its high point to fund development and operations. Hence, the recent fall in the price of ETH cannot be solely attributed to the speculated sell-off of ETH by blockchain projects. From April to September, the price of ETH dropped from $780 to $200, by 74 percent. In the same period, the price of Ripple (XRP) declined from $1 to $0.25, by more than 75 percent. In mid-September, XRP initiated an impressive corrective rally and recorded a two-fold increase in its value. ETH also initiated a corrective rally as the market demonstrated oversold conditions, but the recovery was not as strong as that of Ripple.