The price of cryptocurrency ethereum crashed to start the week, down a whopping 25% in just two days, but things appear to be stabilizing on Wednesday.
ETH was trading right around the $200 level Wednesday morning, which is a key technical level that bulls will want to see hold. If the cryptocurrency breaks down below that level, there could be a lot more selling ahead.
However, Business Insider notes that the recent plunge is probably a healthy thing for the cryptocurrency in the long run:
The pull-back follows a 5,000% rise in the price of Ethereum since the start of the year. eToro analyst Mati Greenspan told Business Insider on Tuesday that the decline was likely just a correction after such a rapid rise. Concerns over the viability of companies using Ethereum’s network to raise money also contributed, he said.
Ethereum is a little like bitcoin — an open-source database overlayed with a digital currency. Whereas bitcoin is made for spending, Ethereum’s token, Ether, simply powers its network. Ethereum’s network allows people to write “smart contracts” and people have been using it to raise money online through DIY crowdfundings called “Initial Coin Offerings.”
Ethereum is the second largest cryptocurrency behind bitcoin, and many believe it will actually overtake BTC in terms of both price and market cap in the coming years.