Remember how Ethereum was touted as the system which could replace Bitcoin and its price skyrocketed? Now, the system is back down after Ether (the currency of the system) lost more than 50% of its value, we read on CoinDesk:
While bitcoin has seen range-bound prices, ether plunged more than 56% during the week ending 15th April at 12:00 UTC, according to Poloniex figures.
George Samman, blockchain advisor and consultant, described the development as one that had been foreshadowed by changes in market fundamentals.
"Ether has fallen back to earth for sure," Samman told CoinDesk. "Its technicals were deteriorating for a while and finally price fell with them."
Christopher Burniske, analyst and blockchain products lead at investment management firm ARK Invest, spoke to the currency’s selloff, noting that exchange data signaled a shift was forthcoming as well.
"The sell order book on [digital currency exchange] Poloniex has consistently been 30-50% deeper than the buy order book," he told CoinDesk.
But while ether has been suffering sharp price volatility, it has also been experiencing robust transaction activity.
The currency’s daily trades neared 35,000 on 14th April and remained above 30,000 during the several days prior. Since mid-March, these daily transactions have almost always stayed above 30,000.
Does this mean that “Ether is done?” By no means. A plunge of such magnitude is nothing unusual after the kind of appreciation Ether had seen before. Remember how Bitcoin went on to above $1,100 and then plummeted to below $400 in a matter of weeks. This didn’t mark the end of the currency, so the same might be the case with Ether and we would definitely not proclaim it “finished.”
All this shows that in the world of digital currencies volatility is still very high and violent swings are nothing out of the ordinary. As such, digital currencies might command relatively high risk premia. This is still the case, even with Bitcoin, in spite of the fact that the currency has remained within a relatively narrow channel. Make no mistake, the fact that Bitcon hasn’t moved much recently is no indication that this will continue into the future.
For now, let’s focus on the charts.