The start of 2018 has not been too good a time for Ether, to say the least. In the first three month of the new year, it went down as much as 47,5%, which is the steepest quarterly decline that has yet been recorded.
Granted, cryptocurrency rates in general have been going down the slope. However, Ether stand out among the other afflicted cryptos, and not in a good way, crashing down after it has gained a fantastic 9382% during 2017.
Ether’s previous “worst performance ever” record occurred at the end of the year 2016, when the cryptocurrency dropped by 39,6%, to $7.97 instead of $13.2. These numbers, however, do not look half as bad compared to the situation currently at hand.
Let’s look at the historical data to try to understand what exactly went wrong.
On the Rise in January
The beginning of 2018 was strong for Ether: on January 13, the rate was $1,432. This, however, got pushed under $1,000 towards the end of the month. January was closed with the more or less optimistic number of $1,118.
At that time, Ether was still considered a safe asset by the investors. Since most of the ICOs are built on top of Ethereum platform, the fees that the creators need to pay are in Ether, which keep the demand to the cryptocurrency stable. Steemit named Ethereum “the most reliable and widely used network in all of cryptocurrency”, and went on to explain: “It is used as the basis for hundreds of tokens and is the foundation for much of the cryptocurrency market. It isn’t going anywhere. It has steadily climbed in value, and when it has dropped in value, it has not been as dramatic of a drop as competing currencies such as Bitcoin”.
In the following months, however, this advantage proved to be not so great after all.
ICO Fraud Concerns in February
On the 6th of February, the prices dropped to approximately $650. That also was the day on which a U. S. Senate hearing took place. During this hearing, the Securities and Exchange Commission discussed the problems of ICO status and fraud. Jay Clayton, Securities and Exchange Commission chairman, very emphatically said that he wants “to go back to separating ICOs and cryptocurrencies. ICOs that are securities offerings, we should regulate them like we regulate securities offerings. End of story.”
This was when Ether started wavering: it dropped to $574, then began recovering, but stopped after reaching around $1,000, and, finally, finished the month at the $850 mark.
Investigations and Bans in March
On the 18th of March, after he Securities and Exchange Commission verified that multiple investigations of ICOs were under way, the price immediately fell under $500. co-director of the SEC’s Enforcement Division Stephanie Avakian confirmed that the agency was “seeing a lot in the crypto space.”
It also didn’t improve the situation that such titans as Facebook, Google, and Twitter, decided to altogether ban the cryptocurrency ads.
Thus, in March, Ether, afflicted by many sorrows, tanked 53% overall. However, it remains up more than 700% compared to the previous year, so, while caution is advised, it is probably far too early to give up on it.