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Is competition at Ethereum’s Doorstep?


Ethereum prices are down this week and are down nearly 77% for the year. The recent news that Goldman Sachs is not planning to launch a cryptocurrency trading desk in the near future, has put downward pressure on prices. If you want to invest in the markets but you’re not familiar with cryptocurrency exchanges you may want to give forex a try, for example you can trade Ethereum on iFOREX. The Ether currency has hit a wall as investors might have run up the price too far too fast, despite a huge influx of programs to the Ethereum platform.

What is Ether

Ether is the currency of choice for the Ethereum platform. If you are interested in building a program that uses blockchain associated with the Ethereum platform, you need to pay for it using ether. While many investors see this blockchain opportunity as a golden opportunity, the run-up in prices likely overextended the value. Now the pendulum has swung in the other direction. With prices declining significantly since the highs in December, investor patience is being tested.

One of the numerous issues facing investors is the significant number of initial coin offerings (ICOs) that occurred in the last year. According to CNBC, who is siting data from Autonomous Next, there were more than $7-billion ICO’s last year. Many of these ICOs stumbled out of the box and have failed to attract investors. The decline in prices has soured sentiment, making it more difficult for platforms to generate interest in their offerings.

Competition is At Ethereum’s Doorstep

While there is a huge advantage for being the first in a space, Ethereum now has direct competitors. EOS which is a startup based in the Cayman Islands, raised $4 billion in its initial coin offering. CNBC reported that the company is being labeled as the “Ethereum killer” is not good for Ether prices. Direct competition in the same space is eroding investor confidence. EOS is not the only competition for Ethereum. Tezo, QTUM and NEO are also coins that provide access to a technology based platform.

Another issue that blockchain technology faces is its inability to scale and ramp up speed. While payment systems like Mastercard and Visa can process thousands of transactions in a second, blockchain technology can only handle 15-transactions per second. It’s the trust factor that is driving the interest in blockchain technology and the idea that it cannot be hacked. Unfortunately, if it cannot scale, it will not be able to compete in the payment processing arena.

Ethereum prices have broke down through the March lows and momentum has turned negative. The MACD (moving average convergence divergence) index, which is a momentum indicator, has generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the red with a downward sloping trajectory which points to lower prices for Ethereum. The only caveat is that prices are oversold. The fast stochastic is printing a reading of 11, below the oversold trigger level of 20. This could foreshadow a correction.

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