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Alex Krüger 🇦🇷 @Crypto_Macro
, 14 tweets, 3 min read Read on Twitter
1/ $ETH is down to $82. Down 94% from its January highs. Cheap? Buying opportunity? Did prices drop more than fundamentals? How did that happen? Let's take a look.
2/ #Ethereum serves two purposes.

A) ICO launching platform.
B) Platform to develop an ecosystem of Decentralized Apps.

ICOs are half dead. The SEC has been killing them. But the SEC is simply accelerating the inevitable, as most ICOs were either scams or money grabs.
3/ What happened is simple to understand. ICO promoters caught the fragrance of easy money and embarked on an unbridled $ printing race, by coming up with the most ridiculous ideas they could muster. Both the general public and venture funds gobbled these ideas enthusiastically.
4/ Adding insult to injury, even many of the seemingly legit projects failed to deliver.

What about the ones that did deliver? There's a handful of Dapps to show for them.

But it's been almost two years since the beginning of the ICO madness, and Dapps barely have any users.
5/ If projects had succeeded in delivering on useful Dapps, these would have created demand for gas, creating demand for $ETH, creating the necessary natural buyers to balance the market against the natural sellers (miners, ICO treasuries). But they didn't.
6/ Natural sellers will always sell and put downwards pressure on price. And for as long as $ETH has no naural natural buyers, it is a pyramid scheme, always in need of new incoming suckers to keep the price from crashing.
7/ $ETH prices did not drop more than fundamentals. Instead, fundamentals went to sh*t.

The tech may be improving. But at the moment there is no demand for the tech regardless.
8/ Looking at investing? For investors, investment thesis usually comes 1st. So it is crucial to answer these two questions:

1) Will ICOs make a comeback? How?
2) Is there a new wave of succesful Ethereum based Dapps incoming?
9/ Remember prices here are not necessarily cheap. $ETH still is 10x higher than in Dec 2016. Do you know any assets outside of crypto that are up +900% in 2 years?
I'll write a follow up looking into how POS would change supply & demand dynamics.

One of the conclusions is that $ETH crashed considerably more than $BTC for good reasons. The $BTC investment thesis has barely changed. The $ETH investment thesis has become questionable.

Don't just buy any crap that Coinbase lists. Be selective.

At no point did I say/imply Ethereum is dead. ETH is not "crap". Most other present & future Coinbase tokens are. There's minimal demand for ETH yet it is greater > 0. Things are being built on Ethereum. Question is, how much is being built, and will there be much demand for it?
Focus was on fundamental reasons behind price dropping so much. Understanding what made price crash helps visualize what is necessary for price to move up again. It is that simple.
Many readers replied "you don't understand, after such an increase, price was supposed to crash." That is absolute nonsense. Price was not supposed to crash 94%. Let's not forget that until recently many were saying "there's no bubble", this is how technology adoption looks like.
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