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Ethereum [ETH], the second-largest cryptocurrency and a leading smart contract platform, has been one of the most controversial coins ever since its inception. The platform allowed several other projects access to the cryptocurrency space, including Tron [TRX], EOS, and MakerDAO. However, over the past year, Ethereum witnessed a significant decrease in terms of its price and adoption.
A recent report on Twitter named The Rise and Fall of Ethereum: A Data Driven Story – by The TIE dwelled into reasons that contributed to its rise and the reasons that forced the platform to fall. The report stated that there was massive buying pressure for the cryptocurrency between 2017-2018 because of the rise of Initial Coin Offerings [ICO]. It further added that purchases were required to use Ether to participate in most of the token sales, driving the price up by more than 100x.
The report added,
“When demand for #ICOs dried up, so did buying pressure for ETH, pushing price down. Demand dropped for Ethereum among ICO investors, as well as among ICOs themselves - which were forced to liquidate their funds which were raised in Ethereum to cover expenses.”
It stated that several projects that raised Ether via token sales during its peak time were forced to liquidate “larger and larger” amounts of tokens to “cover their expenses” because the coin was witnessing a rapid downfall.
The Tie report on Ethereum | Source: Twitter
The report further read,
“We found a very strong correlation between Ethereum and ICO tweet volumes. While the correlation between ETH and BTC tweet volumes is .64 and the correlation between ICO and Bitcoin tweet volumes is just .24, the correlation between Ethereum and ICO tweet volume is .80.”
Source: The TIE Twitter
The report went on to state that the number of Twitter conversations surrounding Ethereum witnessed a significant drop of 44% compared to its peak in December 2017, which was at 64%. However, the report also stated that the conversation surrounding the top ten ERC-20 tokens witnessed an increase of 43% since August 2018, even though the Tweet volume of Ethereum plummeted.
The TIE report on Ethereum | Source: Twitter
The report further read,
“What was once a very strong correlation between both conversations and the prices of Ethereum and ERC-20 tokens has begun to decrease. This could signify that cryptocurrency investors are increasingly disconnecting ERC-20 tokens performance and usage with that of Ethereum.”
The TIE report | Source: Twitter