Nervous cryptocurrency investors watched Ethereum (CRYPTO: ETH) hit a 13-month low of $167 on Wednesday as part of a two-week slump that affected the whole market. ETH short-selling on exchanges such as Bitfinex reached all-time highs this week. But most digital coins saw the welcome color of green — which means price gains — in early trading Thursday morning.
As of press time, ETH bounced back to $190 (nearly 7% gain, per CoinMarkteCap) suggesting that investors around the world bought the dip given the cheap 13-month-low price. As billionaire Warren Buffett said, "Buy when people are scared but be scared when people are greedy."
At $170 Ethereum was down close to 90% from its all-time high of more than $1,400 in mid-January. Thus, some fund managers are bullish on ETH at current price levels. Eric Ervin, CEO of Blockforce Capital, told Forbes
on Sept. 12 "At its current price it is reasonable to consider ether as undervalued."
Ervin expects a bounce in prices soon. "According to our research, the current logarithmic price difference between bitcoin and ether is greater than 3 standard deviations from its average. This paints a picture of the market that is far from normal and should be corrected in the near future."
Satis Group believes that Ethereum is underpriced. In an Aug. 30 report, the firm's analysts forecasted ETH’s price to peak to $882 by next year.
Other big coins gained as well during press time including IOTA (6%), NEO (5%), VeChain (8%), OmiseGo (6%). Despite the bearish sentiment during the first half of September, some digital assets did not show negative price movement. Bitcoin's (CRYPTO: BTC) value saw staying power in the mid-$6,000 range as token holders sold off altcoins, suggesting that users worldwide are confident of BTC's underlying value and resiliency. However, Bitcoin is down nearly 54% this year from a near-high of $20,000 in mid-December.
On Sept. 8, Ethereum's founder cautioned investors that the days of massive gains in crypto assets are likely over. "The blockchain space is getting to the point where there’s a ceiling in sight,” Vitalik Buterin told Bloomberg. "If you talk to the average educated person at this point, they probably have heard of blockchain at least once. There isn’t an opportunity for yet another 1,000-times growth in anything in the space anymore."
(The story continues below.)
Buterin took to Twitter on Tuesday to clarify his recent statements. "To be clear, I never said that there is 'no room for growth' in the crypto ecosystem. I said there is no room for *1000x price increases*. A 1000x price increase from today means $200T in crypto, or ~an entire 70% of today's global wealth being in crypto."
Ethereum's founded added, "What I *actually* said is that, because large portions of the population have already heard of crypto, further growth of crypto in any sense must come from *depth* (ie. actual usage), and not bringing in more attention."
Cryptocurrencies' market cap is currently $195 billion after falling below $190 billion the past couple of days. The question is: Should investors buy the dip? And is this the bottom?
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Disclaimer: The views expressed in this article belong solely to the author. Information contained herein should not be construed as investment advice.