The price of Ethereum has fallen by about -25% since its mid-March peak of around $4,100 and is currently trading just above $3,000. While this loss is in line with the broader market trend, and in particular the decline in the price of Bitcoin by about -22% over the same time, there may be another reason for the decline in the price of ETH, which seems likely, as the German government only sells BTC, not ETH, and Mt. Gox also does not hold any ETH. But what if Ethereum has its own “Mt. Gox”?
Is Ethereum price being suppressed by Golem?
Chinese cryptocurrency journalist Colin Wu (@WuBlockchain) was the first to reported via X on significant ETH fund movements by the Golem project, an Ethereum-based project that held a significant initial coin offering (ICO) in 2016. According to Wu, “Golem, a project that raised 820,000 ETH in an ICO in 2016, has transferred 36,000 ETH to Binance, Coinbase, Bitfinex, etc. in the past 37 days, worth about $115 million.”
On-chain analytics service Lookonchain further revealed the scope of these transactions via X: “Golem has sold 24,400 ETH ($72 million) on Binance, Coinbase, and Bitfinex over the past 3 days and currently holds 127,634 ETH ($372 million). Golem raised 820,000 ETH via ICO in November 2016, when ETH was trading at just $10.2.”
The Golem ICO was an early and significant event for the crypto industry, taking 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.
In its ICO, Golem raised around 820,000 ETH, which was valued at around $8 million at the time, in just 29 minutes, becoming a symbol of the ICO bubble. This funding was to be used to develop the Golem network. Despite its ambitious goals, Golem’s market significance has declined significantly, and its token is now trading at just $0.32 (#151 in terms of market capitalization), a significant drop from its peak price of $1.32 in January 2018.
Harsh criticism from cryptocurrency experts
Criticism was noisy among industry leaders. Adam Cochran, a partner at CEHV, expressed his dissatisfaction by X: “Absolute bastards. They sat on their ETH for ages, doing nothing. And here we are in the era of demand for distributed computing, and they can’t even be relevant.”
Similarly, Jimmy Ragosa, an advisor at Sismo, sarcastically he noticed“Yes, Golem is dropping us. But at least they’re using those hundreds of millions of dollars to build critical, scalable infrastructure and widely adopted applications, right?”
Another perspective was presented by @based16z on X, who It was speculated on Golem’s rationale: “Say what you want about Golem, but they’re not gamblers. Assuming they’ve put $700 million in ETH after 7 years, they know something.”
How much of an impact the Golem sales have on the price of ETH remains to be speculated. However, it seems clear that the continued selling pressure likely played at least some role in the Ethereum price decline. At the time of going to press, ETH was trading at $3,049.
Featured image from Shutterstock, chart from TradingView.com
