The Beginning Of The End: Is The Ethereum Bubble About To Burst? The Beginning Of The End: Is The Ethereum Bubble About To Burst?
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WHY THIS MATTERS IN BRIEF In this opinion piece CEX.io takes a look at the Ethereum and cryptocurrency marketplace and offers their perspective on... The Beginning Of The End: Is The Ethereum Bubble About To Burst?

WHY THIS MATTERS IN BRIEF

  • In this opinion piece CEX.io takes a look at the Ethereum and cryptocurrency marketplace and offers their perspective on whether or not they think the bubble is about to burst


 

Never before has the saying “Nothing lasts forever” been more applicable. Eventually everything will change and cryptocurrencies are no exception. With this in mind, it begs the question of whether or not the Ethereum bubble is about to burst.

The answer is yes, the bubble is about to burst but this may only take place over an extended period of time and not immediately. We look back on the rise of Ethereum and investigate the future of this truly remarkable crypto.

History of Ethereum

The world was introduced to Ethereum in 2013 by the now crypto superstar, Vitalik Buterin, Mihai Alisie, Anthony Di lorio and Charles Hoskinson. Following a crowd sale in 2014, Ethereum went live in 2015 and in 2016 was forked into two blockchains giving Ethereum holders a second coin namely Ethereum Classic. The reason behind creating Ethereum according to Buterin was due to Bitcoin’s lack of a scripting language. Ethereum’s value token is called ether and its code is ETH. It has multiple uses such as paying for transaction fees. Consequently, the price of ETH has increased from around $2 to well over $400. The Ethereum community was shocked when in 2016, the system was hacked and caused numerous speculations on volatility.

ETH vs BTC

To sum up the biggest difference between Ethereum and Bitcoin is their potential and function. Let’s take a closer look at this.

  • The Bitcoin blockchain is mainly used to monitor who owns Bitcoin and how many coins are in circulation; whilst the Ethereum blockchain focuses on the management of the programming code of all decentralized applications.
  • Whilst one can mine Bitcoin, you have to earn Ether.

Why will the Ethereum bubble burst?

At the moment, it is being said that Ethereum is mainly used for ICOs and herewith the first reason why the bubble could burst. If for some reason, a particular ICO goes terribly wrong, the bubble could pop. Take Dogecoin for example. Dogecoin was the first big smart contract ICO on the Ethereum platform but following the detection of a bug, hackers gained access to the system and stole millions. Don’t feel left behind if you’re asking the question: “What is Dogecoin again?” because since the incident, Dogecoin has plummeted and is almost non-existent.

Another reason why the Ethereum bubble may burst due to its affiliation with ICOs, is that the crypto community may become uninterested in future ICOs. This may mainly occur amongst the pump and dump traders. This refers to traders who buy a coin for a minimal amount when it is still at ICO stage and wait patiently until the said coin is listed on an exchange and upon going live, chase the price up to dump their coins when it reaches its maximum. There has been a lot of talk amongst various crypto communities about the so-called pump and dump whales (a person with an enormous amount of a specific coin who can manipulate the price). Traders are being urged to rather invest with long term gains in mind than chase short term (pump and dump) gains. This can be threatening to Ethereum if investors should lose interest in ICOs that do not make quick gains. It is important to note that the industry may be quite far from this.

Taking a look at network splits and how they affect coins, it can be said that with the current Ethereum switch to the proof-of-stake concept, the future is uncertain. Questions have been doing the rounds if Buterin and his team may have considered another hard fork.

Yet another reason for the possible burst of the Ethereum bubble could be due to the decisions made by the Securities & Exchange Commission (SEC). Should the SEC find that ICOs pose big risks to investors and these ICOs cannot beat the Howey Test, we could see the Ethereum deck of cards come tumbling down.

ETH price forecast

Due to supply and demand, we may see Ethereum market capitalization exceed Bitcoin in a couple of years. With central banks and businesses taking notice of cryptos, coins such as Ethereum and Bitcoin will be implemented in the real world for everyday use in the same way we use the FIAT currencies at the moment. This may lead to a further increase in coin prices.

What will happen when bubble bursts?

In case the Ethereum bubble bursts, what is most likely to happen is that ETH price may still rise significantly before it will drop to possibly $1. If regulations are applied by the SEC, especially after what happened to Dogecoin, the market could see a significant drop in ETH token value. But don’t be too alarmed at this stage, there are currently exciting ICOs popping up every week and plenty of investors are raging over the next golden ICO opportunity. ETH still has a very strong community (both miners and developers) behind it and if there is one thing that you can be certain of, it is the drive force of these communities that will see a coin through. Some say ETH may reach $1,000 before this bubble bursts. In the meantime, go about investing and trading with ETH as there are no immediate threats at this stage.

To invest in ETH or not?

When considering to invest in Ethereum on CEX.io, we believe that you’ve made the right choice. CEX.io is the first choice for cryptocurrency traders and investors. For CEX.io users who are holding GBP funds and want to consider ETH, we offer the services of depositing and withdrawing funds in GBP via a credit card or bank transfer. The great news is that you will save on conversion rates. The ETH market on CEX.io is going strong and CEX.io will continue developing this market to bring you, our loyal customer, a more convenient trading experience as well as safe and secure platform.

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Matthew Griffin Global Futurist, Tech Evangelist, X Prize Mentor ● Int'l Keynote Speaker ● Disruption, Futures and Innovation expert

Matthew Griffin, Futurist and Founder of the 311 Institute, a global futures think tank, is described as “The Adviser behind the Advisers.” Recognised in 2013, 2015 and 2016 as one of Europe’s foremost futurists, innovation and strategy experts Matthew is helping governments and multi-nationals re-invent everything from countries and cities to energy and smartphones. An award winning author, entrepreneur and international speaker Matthew also mentors XPrize teams and is regularly featured on the BBC, Discovery, Kurzweil, Newsweek, TechCrunch and VentureBeat. Working hand in hand with accelerators, investors, governments, multi-nationals and regulators around the world Matthew helps them transform old industries, and create new ones, and shines a light on how new, powerful and democratised technologies are helping fuel disruption and accelerate cultural, industrial and societal change. Matthew’s clients include Accenture, Bain & Co, Bank of America, Booz Allen Hamilton, Boston Consulting Group, Dell EMC, Deloitte, Deutsche Bank, E&Y, Fidelity, Goldman Sachs, Huawei, JP Morgan Chase, KPMG, McKinsey & Co, PWC, Qualcomm, SAP, Schroeder’s, Sequoia Capital, UBS, the UK’s HM Treasury, the USAF and many others.

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