Ethereum prices dropped yesterday to low of USD455 before rebounding back to current prices of USD550. We want to explore the reason for correction and should investors buy ethereum at current prices.

Reason for ethereum correction: Dump from EOS crowdsale

It was circulated on twitter that there is 417k eth that was dumped from one single ETH wallet which is EOS crowdsale.

We did a further investigation on why would EOS team want to sell Ethereum now and not a month or two ago when ETH has a higher price.

Based on data analysis of the amount of ETH collected from EOSscan.io website. From period 1- period 274. The record is below.

# of EOS Tokens Distributable # of Contributed ETH Average # of EOS Tokens per ETH Total Contribution (USDT) Total Contribution/# of Contribted ETH 750,000,000.00 4,360,690.68 223.85 2,484,204,955.11 569.68

EOS actually issued 750million EOS tokens, raised ~ USD2.5bn in funds, with an average price of USD570/ ETH. Thus it makes perfect sense for the EOS team to convert ETH for USD at USD570 from a risk hedging perspective. If we take a look at the candlestick chart , ETH prices prior to the correction is at USD560 levels before the dump begin. ETH price dropped to USD460 level over a 4 hr period which seen excessive high selling volume.

Should investors buy ethereum now in view price has shown slight recovery

My recommendation is to delay ETH purchases for following reasons:

1. Yesterday dump is only 417k ETH which is only 10% of what the EOS team has collected so far. Based on EOScrowdsale wallet, there is still remaining 440k ETH in EOScrowdsale wallet. But I believe the EOS team would also have other wallets besides this crowdsale wallet and any dump from EOS or any other significant ICO projects would cause ETH prices to further correct.

2. Despite the slight rebound today, we are still in a bear market. In bearish market, it make sense for investors to buy altcoins cheaply from exchanges rather than investing in ICO. This also imply investors are less likely to pile up on ETH to participate in ICO. Instead many may use their existing ETH holdings and convert them to altcoins on exchanges, which add selling pressure to ETH prices.

3. Competition from other platform coins which include EOS, ADA, Stellar, NEO, Qtum may imply that new ICO projects can choose other platforms for ICO listing rather than ETH. This would also resulted in market cannibalization leading to reduced ETH prices.

Trading recommendations:

Despite the above mentioned, I am still a huge fan of ethereum and in my opinion its one of the must-have coins if you own a crypto portfolio. However, I would reduce my ethereum holdings and exchange some ETH for other platform coins (ADA, XLM, EOS , etc) as I think they may have more upside potential.

Notwithstanding buying ethereum on bargain is always beneficial as it allows one to convert from ETH to altcoin or to hold on as long term investment.

Thus I would recommend to scale purchases slightly above support levels. Two price levels to look at are USD460 and USD300 respectively.