Ether Prices Dip Below $400 for the First Time Since November
Ethereum experienced another brisk selloff Thursday, as the digital currency dipped below $400 for the first time since November amid signs of ICO fatigue.
Ether Slump Continues
The world’s no. 2 digital currency fell to a low of $380 on Thursday and had recovered very little at the time of writing. Prices are down more than 14% over the past 24 hours, with total trade volumes slipping below $2 billion on the major exchanges.
ETH/USD has struggled with oversold levels all week long, but this has failed to inspire a rally. With the exception of a few minor bounces, the digital currency has been in a firm downtrend this week.
Ether is down 50% this quarter, with most of the losses concentrated in the last six weeks. Its dismal performance is hardly unique; the broader cryptocurrency market is down more than 50% year-to-date, including a fresh four-month low on Thursday. At the time of writing, the total crypto market cap was $268 billion, according to data provider CoinMarketCap.
ICO Market Weakens in March
Although not solely responsible for ether’s latest dip, a cooling ICO market may have been a contributing factor. Funds raised by initial coin offerings fell to $557 million this month, less than half of the $1.2 billion generated in February, according to ICOData.
ICOs burst onto the financial scene in 2017, with the vast majority of token projects adopting the popular ERC-20 and ERC-23 protocols. According to one estimate, ICOs generated more than $6 billion in financing last year, surpassing early-stage venture capital. The market extended its record-setting pace in January, with more than $1.4 billion raised.
The sharp slowdown this past month is partly a symptom of “ICO fatigue,” with investors complaining about hasty projects and a lack of direction from token issuers. The cash grab has gotten the attention of security regulators in the United States, with the likes of the SEC devoting more time and resources to investigating the market.
Washington’s top securities regulator has reminded token issuers repeatedly about their obligations to uphold federal securities laws. This warning recently extended to digital currency exchanges that offer trading in so-called security tokens.
To avoid being labelled a “security token” by the SEC, many ICO projects have forgone the U.S. market entirely. Token projects routinely list the United States and China as two jurisdictions barred from participating.
Hacked also reported back in January that, despite record growth, many startups were struggling to meet their funding goals. This reflects both greater investor scrutiny and information overload as hundreds of projects flood the markets every month. Latest data indicate that these factors have finally gotten to the ICO market.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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