Cryptocurrency costs took a significant hit this weekend, with Bitcoin falling listed below $6,700(its floor of the year) and the crypto market cap falling listed below $300 billion.
Lots of have actually hypothesized that the cost crash was because of the United States Product Futures Trading Commission (CFTC) releasing a price manipulation probe into 4 significant exchanges.
Others blamed it on a South Korean exchange getting hacked
Both theories appear possible, nevertheless there is another possibility that is hardly ever checked out, yet completely logical from the viewpoint of the celebrations included.
The reason for the current crypto market crash might be the fault of none besides ICO business.
These business, upon getting countless dollars in ETH or BTC through their preliminary coin offerings, have actually been required to choose whether to keep their holdings in crypto (and ride the huge volatility wave like the rest people), or liquidate to fiat in order to have a steady source of funds to pay staff members and other business expenses.
In a year where a shocking $9 billion in ICO funding has been raised, eclipsing ins 2015 numbers by more than 2X prior to we even reach July, the last thing on any crypto traders mind is whether these ICO business are fretted about the cost volatility of ETH or BTC.
Yet if a business just attains their soft cap ICO target, would not the rational choice be to transform those funds to fiat currency as rapidly as possible to prevent losing 5 or 10% of it due to no fault of their own?
Holding amounts of that size categorize these ICO business as whales, which indicates when they make the typically logical choice to offer big quantities of ETH for something more steady in order to foot the bill, the remainder of the market feels the implications. If this theory applies, it’s not particular how the issue can be fixed.
Nevertheless, if there’s one advantage to this, it’s that some ICO business are showing their dedication to the stability and advancement of their tasks, instead of taking part in cost speculation that might risk their capability to cover expenditures.
This might likewise be an indication that brand-new ICO platforms like ICON and NEM should emerge to water down the concentration of ERC20 token Blockchains in the market.
Till then, we should not be shocked to discover more market crashes credited to just recently moneyed blockchain business simply attempting to keep the lights on.