> During the boom, it acted like a double-pyramid-scheme: the only way to invest in ICOs was to buy Ethereum first
One could compare this to a situation where there is a global economy but a given type of asset or financial instrument only exists in one exchange in one country. Presumably the exchange rate of that country's currency will rise as people buy into its currency to use in investing in that new instrument/asset class.
ICO selling is mostly over - https://diar.co/ethereum-ico-treasury-balances/
It does not affect the price anymore compared to daily trading volumes
Re:Cloudflare's Ethereum Gateway
by nostrademons on Wednesday June 19, 2019 @06:11PM
(#20227873)
The zero-point on that graph is 2.5M ETH. It's certainly down significantly from last year, particularly when measured in dollar terms, but in terms of ETH wallets it's just about half. Withdrawals on the site you cited are at about 2/3 of their 2018 averages.
When the bubble burst, this pyramid scheme works in reverse. Many ICO companies were holding the bulk of their assets in ETH. To convert that to dollars to fund operations, they all need to sell, and they're all fighting over the same shrunken pool of incoming ETH/USD dollars. So as more of them sell, the price dropped, which forced even more to sell, and so on.
IMHO the worst was actually the capitulation last December, which saw ETH go down to $85 from a high of $1200. (Possibly not coincidentally, this capitulation started right around when the $40M raised by a typical ICO declined in value to the roughly $5-7M that's a typical Series A.) But until ICO companies go bankrupt or start shipping useful products, they'll be a continual drag as they liquidate ETH to pay salaries.