Ethereum Price Forecast: 3 Causes of This Week’s ETH Price Crash

ethereum price forecast 31 Jan

Ethereum News Update

Ethereum prices are proving more resilient than BTC or BCH, but that doesn’t mean they are untouched by this week’s crypto market crash. Ethereum too was affected by the tidal wave of pessimism.

As a result, ETH is trading 4.66% lower against the U.S. dollar.

This puts the Ethereum to USD exchange rate near $1,108.36. However, the Ethereum to Bitcoin rate is up 1.94% to 0.10871 BTC, adding a silver lining to this otherwise depressing news.

At first, I looked to see if trading volumes were driving the ETH price crash. They are not. Investors swapped about $4.6 billion worth of ETH in the last 24 hours. It just so happens that no one wanted higher prices.


So what’s causing this widespread pessimism?

I can’t say for sure. No one can see inside the minds of millions of investors. That said, here are three major news stories that could be driving the bearishness.

Ethereum price chart for 31 Jan

  1. Facebook delists ICO advertisements. How do you get new investors into the crypto market? Some of it happens by word of mouth. Some of it happens through aggressive marketing. Facebook, Inc. (NASDAQ:FB) just boarded up one of those entry points by banning advertisements for Bitcoin and initial coin offerings. (Source: “New Ads Policy: Improving Integrity and Security of Financial Product and Services Ads,” Facebook, January 30, 2018.)
  2. Regulators take aim at Bitfinex and Tether. The murky relationship between crypto exchange Bitfinex and the company behind the USDT token, Tether, is finally coming under scrutiny by the Commodity Futures Trading Commission. Both companies received subpoenas this week. (Source: “U.S. Regulators Subpoena Crypto Exchange Bitfinex, Tether,” Bloomberg, January 30, 2018.)
  3. Lawyers start gunning for Bitconnect. Texas authorities were already looking into the strange case of the Bitconnect cryptocurrency and a personal lawsuit was filed in Florida. But now, a Kentucky man named Brian Page has launched a second lawsuit, alleging the company of running a “Ponzi scheme.” (Source: “BitConnect Hit With Second Lawsuit Over Ponzi Allegations,” CoinDesk, January 30, 2018.)

Independently, these stories are harmless. But taken together, they read as a narrative—one that tells of a bearish crypto market. Investors should expect a little more short-term volatility if these kinds of headlines persist.

Analyst Take

Some people have criticized my 2018 Ethereum price forecasts as bearish. I think the crypto could hit $1,500 by the summertime and $2,500 by the end of the year.

These are not bearish estimates. They merely reflect the difficult, more arduous road that Ethereum faces in 2018. There will probably be a lot of dramatic price swings along the way.