Volatility in the cryptocurrency market is unlike volatility in stocks. No matter how many times I tell that to investors, they still react with shock when prices fall as much as they did today.
Were there a lot of flashing red numbers on trading screens? Absolutely. Does it warrant the amount of panic that we saw? Absolutely not.
Ethereum’s core technology is still up and running. The Byzantium upgrades taking place during the week appear to be sufficient, if not ideal. Plus, we recently learned that a major Russian bank is joining the Ethereum Enterprise Alliance.
So all in all, the fundamental direction of Ethereum appears unchanged. If there had been a big piece of Ethereum news that shook up markets, we would know about it.
Despite a concrete reason for the losses, ETH prices fell 7.39% in the last 24 hours, bringing the Ethereum-to-USD exchange rate down to $297.56.
In other words, there wasn’t some mysterious Ethereum news that drove down prices. Investors just started to cash out and, once that ball started rolling, it was hard to stop.
Why? Because pessimism just breeds more pessimism. Investors are people, and people fall victim to herd behavior all the time, even when they believe they are acting rationally.
ETH prices had previously fluctuated around the $300.00 level, but there were a few days where it seemed that threshold was firmly in the rear-view mirror.
For instance, Ethereum traded as high as $347.98 on Saturday. But investors ran out of optimism by Tuesday, which is when the price began to unravel. Ethereum fell 4.89% that day and then suffered even bigger losses today.
We expect ETH prices to stabilize either today or tomorrow. None of the recent price movements are significant enough to deter our $1,000 Ethereum price forecast, because we are all too familiar with the kind of volatility that pervades this sector.