QuarkChain, the China-based Ethereum competitor that recently completed its $20 million ICO is having a lot of trouble holding its post-ICO price gains. After many accusations of shady behavior, the investing public could be losing confidence in this once promising project. Today, prices are sitting at around $0.07 each from the post ICO high of $0.34. What’s causing this sharp decline in prices? Is it just a result of the overall bear market, or is something else going on?
What is QuarkChain?
QuarkChain is a cryptocurrency project that recently held an ICO and released ERC-20 tokens. Those tokens will be later swappable for mainnet tokens. According to its official website, the goal of the project is to create a high-speed blockchain that will support 1 million transactions per second or more at launch by making use of sharding technology. Sharding is a type of on-chain scaling that Ethereum co-creator Vitalik Buterin has been a very vocal proponent about.
Read: Our Guide to QuarkChain
The project received an incredible amount of attention and hype in both its pre and post-ICO phases. Initially, the ERC-20 tokens for QuarkChain were slated to go on sale for $0.018 each. Once the sale was completed and the hard cap of $20 million was reached, prices for QuarkChain tokens quickly surged and hit more than 10 times their initial price.
The ICO was split into a public and private sale, with the private sale consuming the lions share of the allotment at $16 million. This left just $4 million for the public sale.
The Doubts Begin
While many QuarkChain investors were thrilled to see their high returns, many in the community were not so sure. This is because there were some issues related to the total supply of tokens in relation to the amount that were sold in the ICO.
Today, according to coinmarketcap.com, QuarkChain will have a total hard capped supply of 10 billion tokens, but less than 5% of those are currently available in circulating supply. This drastic restriction on supply has led some investors to believe that QuarkChain may be artificially inflating prices by leveraging hype and usually restricting supply.
The ICO itself was supposed to have 20% of the total supply available for purchase – and that may have been the case – but for whatever reason it isn’t appearing on coinmarketcap.com. And even if the full 20% was sold and made available to the public, why sell such a small percentage of the overall supply?
Basically speaking, if the entire QuarkChain token supply were to be made available today, prices would drop most likely by a factor of 10. This would put the current price of seven cents at well below the ICO price of $0.018.
No Foothold Found
When we look at the pricing for QuarkChain tokens, we see a sharp pump on launch, followed by an even sharper dump after the tokens hit the market last month.
Following this event, prices have seen a near continuous downward slope with no end in sight. And while other assets like bitcoin have seen generally flat movement in the last month while holding at around $6000-$7500, QuarkChain has seen a drop of over 66% and there does not appear to be any signs of this trend reversing just yet.
To make things worse, reports are coming in that the supply will effectively double as of July 4, which could greatly depress prices.
— Alex Acevedo (@ershovyulian198) July 4, 2018
RIGHT NOW IT IS MARVELLOUS TIME TO INVEST IN #QUARKCHAIN. IT HAS SUBERB TECHNOLOGY, GREAT TEAM, ROADMAP ETC. DO YOUR OWN RESEARCH.
— jarmo grann (@GrannJarmo) June 28, 2018
Regardless of this, many investors in QuarkChain are still holding a positive attitude and believe that this downward movement is tied to the overall bear market trend. What is yet to be seen, however, is what will happen once the next 500 million tokens hit the market. Will prices drop by half, or will enough new investors step in to absorb the difference?