The price of ether, the native digital asset powering the ethereum network, has fluctuated wildly over the last few days as its developers struggled to determine how to resolve the loss of investor funds at one of the platform’s signature projects.
At issue is the loss of roughly 3.6m ETH taken from a distributed autonomous organization (DAO) called The DAO and the ongoing drive to secure both funds lost to attackers and those that remain, for now, under the control of aspects of its development community.
Against this backdrop, ether’s markets have been fluctuating wildly on the uncertainty over both how the situation would be resolved, and how the resolution would be received.
For example, fears persist that solutions in which developers need to rewrite the blockchain’s history, reversing transactions that were valid according to the platform’s rules in a bid to bail out customers, will cause a loss of confidence in the market and result in ether being delisted by major exchanges.
After rising to a high of 0.028 ETH/BTC around 3:30 UTC on 17th June, ether declined roughly 50% to 0.014 ETH/BTC at 6:55 UTC on 20th June, Poloniex figures reveal. By 04:10 UTC on 22nd June, the digital currency had recovered to 0.024 ETH/BTC, approximately 70% higher than its price only two days prior.
But while The DAO hack is laying ethereum’s technical challenges bare, some market participants are viewing the decline as an opportunity to buy, Max Boonen, founder of market maker B2C2, told CoinDesk.
Such comments, echoed by other market observers, infer that there is confidence in the fundamentals of the ethereum market, despite the fact trading began just last year.
For example, market expert Petar Zivkovski emphasized that ether’s “fundamentals are still strong” and that “the DAO scandal will come to pass”.
Of note is that while ether experienced some sharp fluctuations recently, it was not alone among digital currencies.
The price of bitcoin also experienced some volatility over the last few days, a development that has served to further amplify ether’s price swings, Tim Enneking, chairman of Crypto Currency Fund, told CoinDesk.
The digital currency’s price fell from an on opening price of $764.04 on 20th June to a closing price of $631.72 at 19:40 UTC on 21st June, CoinDesk USD Bitcoin Price Index (BPI) figures reveal. The currency then recovered, rising to $678.22 UTC between 12:45 and 12:59 UTC on 22nd June and then falling to as little as $610.32 at 18:00 UTC that same day.
At press time, the price of bitcoin was hovering just above $600.
With this in mind, Zivkovski, director of operations for bitcoin trading platform Whaleclub, stated that he believes the markets are likely to be choppy in the days ahead.
Zivkovski concluded:
“We still think there is some downside before that happens, driven mainly by former bulls looking to cut losses as the ETH dumps took them by surprise.”
Charles L. Bovaird II is a financial writer and consultant with strong knowledge of securities markets and investing concepts.
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