A recent report on Bloomberg has fueled questions about why is ethereum falling and when will ethereum recover?
Olga Kharif a staff writer for Bloomberg has claimed ethereum, the second largest cryptocurrency by market capitalization is losing its luster and market share to competitors like EOS and Tron (TRX). In the article published yesterday, he suggested reasons for why is ethereum falling.
Ethereum during its Heyday
Ethereum was launched in 2015 after it was created by Vitalik Buterin with inputs from other co-creators including ConsenSys founder Joseph Lubin. It was different from the dominant bitcoin and other blockchain networks at the time because it allowed the creation of decentralized apps and deployment of smart contracts on its network.
Ethereum would soon enjoy the monopoly of the platform for launching Initial Coin Offerings (ICO), especially through its ERC-20 token standard. In 2017 when several startups launched high grossing ICOs, they were on the Ethereum mainnet and used ethereum’s native token the Ether (ETH). Soon the ETH became such a hot coin and soared to an all-time high of more than $1,400.
Why is ethereum falling this period?
Given its illustrious past, one is tempted to ask, why is ethereum falling now?
There are a lot of factors for this but one of them is because the ethereum blockchain network has lost its monopoly as an ICO launch network. Samani, co-founder of Texas-based hedge fund Multicoin Capital Management told Bloomberg that startups are now issuing tokens on competing networks.
“The simple reality is that until the last six-to-nine months, there were no other options besides Ethereum,” said Kyle. “Now there are.”
He was making reference to the so-called “ethereum killers” which are blockchains launched to offer a better alternative to Ethereum for launching DApps, smart contracts, and token sales.
These “Ethereum killers” include rival platforms like EOS and Tron (TRX) which advertise features superior to ethereum thereby attracting developers and blockchain startups to their blockchain.
ETH Price Chart Goes Down As Demand for ETH Wanes
The loss monopoly spread into other areas like crypto collectibles and purchases from blockchain stores. For instance, cryptokitties the popular cat game on the ethereum network needed users to buy digital items for the game using ETH. But now some of those applications support other rival blockchains.
Founder of Ikigai, a Los Angeles-based crypto hedge fund Travis Kling explained that ETH price is falling due to the competition it is now facing
“Owning Ethereum today is a call option on what you think the network is going to be in the future…To the extent that Ethereum competitor projects get traction with developers, with users, with dapps built on top of the platform, that will be viewed by the market as being detrimental to the overall value of Ethereum, and that can have a negative price impact on Ether.”
As Smartereum reported, EOS and Tron has overtaken ETH as the platform with most DApps with most active users. In fact, no ETH DApps made it to the top 10 list at the time. Per DaapRadar, Only 28 percent of DApp users are on Ethereum while EOS and Tron have 48 percent and 24 percent respective being around much lesser period than Ethereum.
Will Ethereum Recover?
Next question on the minds of observers is “when will ethereum recover?”, if it will recover at all. But Vitalik Buterin who admitted that Ethereum is falling to rivals but says it was inevitable.
“It’s definitely lost some lead to some extent, and I think that’s just because, first, it’s kind of inevitable and unavoidable because Ethereum really was the first general purpose, smart contract…that’s part of an inevitable part of the process.”
Ethereum still has the biggest developer community a lot of whom are working on ethereum blockchain scaling projects. The ethereum Constantinople hard fork has given room to developers to focus on scaling and future ethereum hardfork. If these challenges are addressed, ETH may experience a resurgence but it is a complex undertaking.
Though it is still able to attract ICOs due to it’s base and developer support, it could further be threatened by Binance Chain, a native blockchain being developed by Bianance, the world’s largest cryptocurrency exchange. Binance has already launched its ICO Launchpad which has completed some token sales including that for BitTorrent with minutes.
Ethereum Price Today
1 ETH to USD is currently at about $141 according to data from coinmartketcap. It has increased by almost 1 percent in the last 24 hours and has a market cap of $14.8 billion.