Ethereum (ETH) plunged to its lowest point of the year on Tuesday, November 11, extending a grueling 9-month downturn for the world’s second-largest cryptocurrency.
According to CoinDesk data, ETH prices dropped 7%, bringing its yearly decline to over 76%. After starting the year above $770, it plummeted to a low of $180.60.
Key Factors Behind Ethereum’s Decline
1. Fading Investor Enthusiasm
Interest in ETH has waned due to:
- Slow adoption of Ethereum’s technology for mainstream applications.
- Rising competition from blockchain rivals like EOS and Stellar (XLM), which aim to dethrone Ethereum as developers’ preferred platform.
Unlike Bitcoin (BTC), which connects to global financial networks, Ethereum enables access to decentralized computing power. Analysts note that many failed initial coin offerings (ICOs) built on Ethereum have forced startups to sell their ETH holdings to manage cash flow.
Joe DiPasquale, CEO of BitBull Capital, explains:
"ETH prices were inflated during the ICO boom. With ICOs cooling off, Ethereum faces a supply-demand imbalance."
2. Short-Selling Pressure
Cryptocurrency markets have also struggled with short-sellers. Platforms like BitMEX introduced products allowing traders to bet against ETH, further suppressing prices.
3. Stark Contrast to 2017
Ethereum’s 2018 performance sharply contrasts its 2017 rally. While Bitcoin surged ~1,318% that year, ETH soared 9,162%, from $8 to over $756.
The ICO-Ethereum Connection
During 2017–early 2018, crypto startups raised billions via ICOs—primarily denominated in ETH. While rising ETH prices initially buoyed these projects, the prolonged bear market has pressured ICO-funded companies to liquidate ETH reserves to sustain operations.
Key Data:
- ICOs retain 38% of initial funds on average; 62% have been sold/transferred (per Diar research).
- ICO-held ETH now represents 3.7% of total supply (down from 4.5% in April).
- Some startups (e.g., Aragon, Gnosis) hold more value in ETH than their native tokens.
Analyst Larry Cermak warns:
"Startups burning ETH for runway could prolong ETH’s bearish trend."
FAQs
1. Why did Ethereum drop so sharply in 2018?
Slowing ICO demand, competition from rival blockchains, and short-selling pressure contributed to ETH’s decline.
2. How does Ethereum differ from Bitcoin?
Bitcoin acts as digital gold or a payment network, while Ethereum enables decentralized apps (dApps) via smart contracts.
3. Are all ICOs selling their ETH holdings?
No. While some liquidate ETH for operational costs, many retain significant reserves (38% on average).
4. Could Ethereum recover in 2025?
Market cycles are unpredictable, but ETH’s utility in DeFi and NFTs positions it for long-term relevance.
👉 Discover how leading exchanges are adapting to crypto volatility
5. What’s the outlook for competing blockchains?
Projects like Solana and Cardano aim to outperform Ethereum in speed and cost, but ETH’s developer network remains dominant.
👉 Explore the future of decentralized finance (DeFi)
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