The price of Ether, the native cryptocurrency of the Ethereum blockchain network, has dropped 14 percent overnight as other major cryptocurrencies like bitcoin, Ripple, and Bitcoin Cash fell in the range of 2 to 6 percent.
Ether Drop on Bitfinex
Within one hour, the price of Ether dropped from $574 to $492, by more than 14 percent. While ETH rebounded relatively fast from the $492 mark by 6 percent, it is still down around 10 percent from $574.
Some analysts including WhalePanda, the host of popular cryptocurrency podcast Magical Crypto Friends suggested that ETH could have dropped due to the dump of Ether by initial coin offerings (ICOs) and blockchain projects.
“Wondering who just ragedumped $ETH on Bitfinex. Didn’t $EOS still have a lot of ETH and they were using Finex before,” speculated WhalePanda, raising a valid question.
The issue with ICOs and blockchain projects that raise many millions of dollars after token sales, to fund operations and developments, ICOs need to liquidate a significant portion of the ETH they raised. Most ICOs, like EOS, tend to liquidate their ETH on public cryptocurrency exchanges like Bitfinex, triggering a domino effect and leading other cryptocurrencies to drop by large margins.
Price drops triggered by transparent events like the movement of funds from the EOS smart contract to cryptocurrency exchanges often lead to short-term recoveries. As such, the initial price drop of Ether by around 14 percent was reduced to 8 percent.