ethereum price has dropped by around -25% since its mid-March peak around $4,100 and is currently trading just above $3,000. While this loss is in line with the general market trend and in particular with bitcoin’s price drop of around -22% over the same period, there could be another reason for eth’s price drop, which seems plausible since the German government only sells btc and not eth, and Mt. Gox doesn’t own eth either. But what if ethereum has its own “Mt. Gox”?
Is ethereum Price Suppressed by Golem?
Chinese cryptocurrency journalist Colin Wu (@WuBlockchain) is the first x.com/WuBlockchain/status/1810148153087173023″ target=”_blank” rel=”nofollow”>reported via x on significant eth fund movements by the Golem project, an ethereum-based project that conducted a notable Initial Coin Offering (ICO) in 2016. According to Wu, “Golem, a project that raised 820,000 eth in ICO in 2016, has transferred 36,000 eth to Binance, Coinbase, Bitfinex, etc. in the past 37 days, worth approximately $115 million.”
On-chain analytics service Lookonchain further revealed the extent of these transactions via x: “Golem has sold 24,400 eth ($72M) on Binance, Coinbase, and Bitfinex in the past 3 days, and currently holds 127,634 eth ($372M). Golem raised 820,000 eth via an ICO in November 2016, when the price of eth was just $10.2.”
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The Golem ICO was an early and significant event for the cryptocurrency industry that took place in November 2016. Golem aimed to create a decentralized supercomputer by harnessing the combined computing power of users’ machines, from personal laptops to entire data centers. The idea was to allow users to rent out their computing resources to others.
At its ICO, Golem raised approximately 820,000 eth, which at the time was valued at around $8 million, in just 29 minutes, becoming a symbol of the ICO bubble. This funding was supposed to be used to develop the Golem network. Despite its ambitious goals, Golem’s relevance in the market has significantly decreased, and its token now trades at just $0.32 (#151 by market cap), a marked drop from its peak price of $1.32 in January 2018.
Harsh criticism from cryptocurrency experts
Criticism has been strong among industry leaders. Adam Cochran, partner at CEHV, x.com/adamscochran/status/1810216068524155209″ target=”_blank” rel=”nofollow”>voiced His discontent via x: “They are complete bastards. They sat on their eth for years doing nothing. And here we are in the era of distributed computing demand and they can’t even be relevant.”
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Similarly, Jimmy Ragosa, an advisor to Sismo, said sarcastically: x.com/JimmyRagosa/status/1810195125240320047″ target=”_blank” rel=”nofollow”>he stressed“Yes, Golem has been scamming us. But at least they are using these hundreds of millions of dollars to build critical scaling infrastructure and widely adopted applications, right?”
Another perspective came from @based16z on x, who x.com/based16z/status/1810153936268964267″ target=”_blank” rel=”nofollow”>speculated On the logic behind Golem’s actions: “Say what you want about Golem, but they’re not exactly gamblers. I guess they know something when they dump $700 million worth of eth after 7 years.”
The influence of Golem’s selling on the eth price remains pure speculation. However, it seems clear that the constant selling pressure has likely played at least some role in the ethereum price decline. At the time of writing, eth was trading at $3,049.
Featured image from Shutterstock, chart from TradingView.com
