After Dfinity launched the Internet Computer (ICP) into the public domain on the 10th of May, 2021, the cryptocurrency that quickly ranked amongst the top 10 cryptocurrencies by market capitalization has seen its wealth plummet in the wake of the cryptocurrency market correction.
It took less than two months for the token of one of the most promising cryptocurrency projects to crash to an all-time low of $20.08.
ICP traded at an all-time high of $737.20 which put the market capitalization of the project at approximately $100 billion on the day it was launched into the public domain. The coin has been on the decline since then. Due to some confusion, ICP traded as high as $3,161 on the Binance exchange. The coin is trading $41.47 (Market capitalization of $5.6 billion) at the time of writing this report and it represents a decline of approximately 95% from its all-time high. ICP is currently ranked #20 by market capitalization, according to coinmarketcap.
Why did ICP crash so badly?
From the day ICP launched, the price had a wild run when several exchanges listed it including Coinbase, Binance, Huobi and OKEx. In just one day, May 10, the price went to an ATH of $737.20, then to as low as $250 before slowly coming back to around $400.
According to Deis Vinokourov, head of research at Synergia Capital, “The fact that the token was launched during such a boisterous [market] likely pushed initial valuation into upper range of expectations.” Deis Vinokourov suggested that ICP may have been overvalued.
Another factor is the May 19th Market Crash. Just 9 days after ICP listed, the cryptocurrency market saw a market correction where Bitcoin and the entire cryptocurrency market lost more than half their value with ICP not being left out. On the day, ICP Plummeted approximately 46.50% to trade $107.86 after just trading $201.68 barely 24 hours before the crash. Since May 19th, the cryptocurrency market has been struggling and general market sell-off has been seen across the board with no altcoin left unscathed.
What they are saying
Rick Delaney, senior analyst at OKEx Insights stated that, “With prices retreating across the industry, the most recently hyped projects have been among those hardest hit. In ICP’s case, it seems the harder and faster it pumps, the more severe the dump.”
On Saturday, Goldman Sachs covered the Dfinity project in its latest cryptocurrency report. Goldman Sachs released a report titled “Digital Assets: Beauty Is Not in the Eye of the Beholder.” The report covered several cryptocurrency assets including ICP. It highlighted some pros and cons of the project and the market reacted favourably as the price jumped from $27.61 to $48.20 representing a 75% jump in the price.
Although having highlighted some pros and cons related to the project, Goldman Sachs in its usual fashion mentioned some headwinds facing the cryptocurrency market and ultimately stated, “We do not believe that cryptocurrencies are a strategic asset class that adds value to our client’s portfolios.”
The Dfinity Foundation, the creator of the governance token of The Internet Computer, claims ICP makes every facet of decentralized finance (DeFi) applications “uncensorable.” The project raised more than $120 million, with investors including Andreessen Horowitz (a16z), Polychain Capital, Scalar Capital, CoinFund, Multicoin Capital and Greycroft Partners.
One of the pros Goldman Sachs mentioned is that the project could “Could pave the way for the future” but they also mentioned, as a con, that the project is untested.