Ethereum Plunges 20% on Reports of ICO Investors Cashing Out

Ethereum experienced a significant decline of 20% on Tuesday, with Ripple and Litecoin also seeing drops exceeding 13%. This downturn was attributed to reports indicating that investors who purchased Ethereum to engage in initial coin offerings (ICOs) are now selling their assets to meet financial needs.

As of 12:20 AM ET, Ethereum had plummeted 20.7% to $266.4 on the Bitfinex exchange. Similarly, Ripple decreased by 6.4%, priced at $5,971.0, while Litecoin fell by 14.0%, trading at $0.26296. Additionally, one other cryptocurrency dropped 13.1% to $52.296.

The surge in Ethereum’s value earlier this year, which pushed it above the $1,000 mark, was largely driven by ICOs utilizing the Ethereum blockchain. However, Bloomberg reported that many investors are now liquidating their holdings to address expenses as anxiety grows regarding the persistence of the cryptocurrency bear market.

Biswa Das from the cryptocurrency quantitative hedge fund BloomWater Capital noted, “These startups are raising a lot of funds but they don’t have treasury management or enough cash management experience, so they’re selling too early and causing a lot of pressure in the market. It was fine last year, but right now the market is so fragile that it causes a lot of pressure.”

Currently, Ethereum is trading at a nine-month low, sliding below the $300 mark for the first time since early November and down approximately 60% for the year. Das indicated that the selling pressure may not have subsided just yet, stating, “The pain is probably not over.”

The broader market has also shown signs of distress following reports that the U.S. Securities and Exchange Commission has postponed its decision regarding a fund from a notable investment firm, with the original deadline set to expire this week.