Ethereum (ETH) Gets Mauled by Worsening Sentiment, Bitmex Short Selling

The ETH market crashed after a remark from Vitalik Buterin got misinterpreted as pessimistic about the future growth prospects of Ethereum and the crypto space.

Ethereum (ETH) remains caught in a downward trend, with several short-term and longer-term factors depressing the price. ETH touched lows of $180.60 on September 11 and continued to slide closer to $170. As of 9:00 UTC on Wednesday, the asset traded at $171.73.

Because of incomplete statistics, not all exchanges are factored into the data for Ethereum trading. However, there are indications that trading on Bitmex contributes to tanking ETH through short positions. Coinmarketcap does not currently reflect Bitmex statistics, but CryptoCompare shows that more than 16% of ETH trading happens on “Other” exchanges.

The biggest speculation in ETH and the sell-off happen in dollar-denominated positions, with a subsequent fall against Bitcoin (BTC). As ETH is seen in terms of dollar prices, its value may be entering a whole new stage of price discovery, defining what the new worth of the Ethereum ecosystem would be.

On top of unraveling prices, Ethereum mining has also seen a slowdown in the past weeks. Mining fell from around 295 TH/s on August 26 to 255 TH/s as the slide accelerated in recent days. Ethereum is also slowly preparing to become a staking coin, which will render mining unattractive. The sliding market price is also pushing miners to cut costs and cease operations.

Still, there is a silver lining for Ethereum: the current lower values may allow more buyers to accumulate ETH for staking when the Casper update finally materializes. The minimum amount for staking is 32 ETH, entailing an annual reward of roughly 3% depending on other network participants. It is possible that depressed Ethereum prices serve to decentralize the network more by making staking more accessible.

The 32 ETH minimum will be allowed for the experimental sharding system, while the main network still requires 1,000 ETH to stake, which is a serious upfront cost even at the currently deflated prices.

For others, the Ethereum weakness at present is not unique and has been observed in the past, when ETH prices went on to recover. Ethereum has been criticized as a non-viable, over-hyped project, but development continues, and this venture remains a large and important part of the crypto ecosystem.