Investors are throwing their life savings and spending money at Ethereum, showcasing how irrational investments and FOMO (Fear of Missing Out) can lead to bubbles and subsequent panic sales.
Ethereum Buying Frenzy
Ether, the native cryptocurrency in the Ethereum blockchain, has grown over 4000% in 2017 as developments like the creation of the Enterprise Ethereum Alliance and the growing number of Initial Coin Offerings in the network propelled it close to the $400 mark. During this time, Ethereum has also amassed a growing community of tech-savvy users as well as traditional investors.
The disruptive concept behind Ethereum, coupled with the prospect of large winnings has attracted many investors including college students. An article published yesterday by Motherboard tells the story of a college student in computer science programs that was studying abroad investing all of his spending money sent by his parents on the cryptocurrency and he was not alone, as Ethereum became widely popular among his group.
According to the article, the student, named Sam, put $10,000 of his life savings into ETH, quickly tripling his investment. Even though the story has a happy ending, it also reveals what is happening with many investors getting into Ethereum and how badly it may end for those that are just getting into space.
Is Ethereum Ready?
Although Ethereum has a lot to offer in its features, which have granted it a place next to Bitcoin as the top cryptocurrencies in the market, the accentuated growth of ETH may not be sustainable. Ethereum, as a project in development still faces many challenges before being anywhere near ready for mass adoption.
Bitcoin is also far from ready, but with the likely implementation of the SegWit2X agreement, Bitcoin’s most pressing issue will be solved, setting the stage for future improvements. Ethereum, however, must still deal with all sorts of scalability and bloating problems along with several protocol changes like the implementation of Proof of Stake.
Following the accentuated rally that took Ethereum from the $10 range in the beginning of the year to $336 now. Already, Ethereum is showing signs of weakness on the price charts, as the Bitcoin price increases. Currently sitting at 0.1253 BTC, Ethereum took an accentuated dive yesterday, dropping roughly 10% against Bitcoin.
Is Ethereum in a Bubble? Is the Bubble over?
Many users have pointed towards a bubble in the price, which could have the same result as Bitcoin’s 2013/2014 bubble. Earlier this month, prominent Bitcoin community member “WhalePanda” warned about the prospect of a bubble, noting that it may bring along consequences that affect the whole cryptocurrency community negatively:
The [damn] regulators will step in after this bubble pops and what scares me is the fact that it will damage all of crypto, including Bitcoin, not just Ethereum and its ICO’s.
Although everyone is free to invest as they see fit, users should never invest more than what they can afford to lose, especially when it comes to crypto, where volatility rules. A look at the all-time chart for Bitcoin and other cryptocurrencies will showcase this perfectly.
Is Ethereum in a bubble? If so, is the bubble coming to an end? Let us know what you think in the comment section.
Images courtesy of Wikimedia, Ethereum, KnowYourMeme