Crypto is a very volatile investment. Everyone who spends any time in these markets knows this all too well, so it is really no surprise to anyone that there are many things that could really stir up the prices across the industry. Whales, for example, are wealthy traders who can manipulate the market by placing big sell, or big buy, orders at any time. While this certainly makes people nervous, it is comforting to know that these traders are always looking for a profit, which makes their moves a little bit more predictable (most of the time).
A big wildcard that most people don’t think of, however, is the successful ICOs. When a new coin comes to market, they almost always run an ICO. The successful ones can bring in millions in Ethereum. This is the money that the team behind the coin will then use to cover the costs of development, marketing, and much more.
Currently, it is estimated that about 3% of the total Ethereum supply is held by ICOs. The problem with this is that the main goal of ICOs isn’t just to turn a profit like the whales, but to build their own coin. This means they can dump large sums of ETH on the market at any point if they need the funds.
This makes ICOs far less predictable. In addition, while a whale may consider what their trades will do to the market before they make them (for good or bad), most ICOs are only thinking about when they need liquid money, and how much.
There isn’t a lot that can be done about this issue, and while it is primarily an increased risk for Ethereum, it can impact the entire crypto market. If too many ICOs start selling to liquid some assets, it could cause a big drop that could spread to many other coins. This can really make an already volatile market just that much more unstable.