Ethereum rout accelerated by ICOs selling the coin that launched them
There has been much speculation over the past few days on what’s behind the sharp fall in the price of ether tokens on cryptocurrency exchanges, and it now emerges that initial coin offerings (ICO) have been big sellers.
While the price of the Ethereum Foundation’s native token has rallied at the end of this week, it has been a tumultuous fortnight for the cryptocurrency – starting the month at $295 before sinking 43% to a 13-month low of $169 on Wednesday.
Ethereum ICO champion
Ethereum’s blockchain is by far the most popular platform for launching ICOs – an estimated 70% of crypto start-ups choose to launch on its blockchain – but funding for this type of capital raising saw its sharpest decline in August for 16 months.
Indeed, research published by TrustNodes on Thursday shows that some 160,000 ether coins have been sold by ICOs in the previous 10 days – three times more than were sold in August.
This followed around 120,000 coins sold in the 20 days prior to that – a total in current dollar terms of $54m.
Digix ether sale
Digix, an ICO claiming to leverage gold bullion to be made “divisible and transferable on the blockchain”, was the biggest seller of ether in the past few days.
TrustNodes reported: “Their sell pressure, which may have contributed to the flash sell-off last week has now halved the value of their ether holdings,” which had an original value of about $150m.
Tanya Abrosimova, analyst at FXStreet, said: “Being the coin of the platform widely used for initial coin offerings, ethereum fell victim to massive sales as some of the startups who used it to raise funds have started to cash out.”
On Friday, ether was up nearly 13% in early European trade to $214.46. A full round up of the price moves of the top 10 cryptocurrencies will be published here later this morning.