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The long-awaited recovery occurred when the community accused the Internet Computer team of dumping $6 billion in ICP tokens.
After gaining 41.69 percent on Sunday, Internet Computer (ICP) grabbed the attention of day traders.
The ICP/USD exchange rate closed the session at $42.98 after correcting lower from its intraday high of $45.01. At its quarter-to-date low, the pair was trading at $28.31. Meanwhile, on Monday, it surged to a new intraday high of $47.63. Therefore, its latest rebound returned as much as 68.27% in paper profits.
The significant price reversal in the Internet Computer market also came after a sharper 95 percent drop since ICP’s launch more over a month ago on top cryptocurrency exchanges such as Binance and Coinbase. As a result, the cryptocurrency’s vengeance recovery in the preceding 24 hours accomplished nothing to alter its overall negative tendency.
What crashed ICP?
Some members of the community claimed that Dfinity, the Zurich-based charity that backs the Internet Computer project, had dumped almost $6 billion in ICP since the token became trading. Redditor @trapsandwich, who claims to be an early investor, published a comprehensive study on r/Dfinity more than a month ago, indicating that wallets related to the Internet Computer team were constantly sending tokens to exchanges.
Dfinity moderators on Reddit removed the post.
@trapsandwich also claimed in another Reddit post that Dfinity locked the ICP tokens — that their early investors had held — for an extra month after they listed the token across crypto exchanges. But at the same time, the firm did not lock any of its own 111 million ICP holdings.
Another Redditor @Beneficial-Source147 claimed that the amount of ICP tokens Dfinity dumped since genesis was as high as 90 million. However, other Redditors jumped in defense, stating that most ICP transfers were grants dedicated to developers, not sales.
Overall, the allegations suggested that Internet Computer deliberately restricted its investors’ access to ICP marketplaces. Meanwhile, the token fell further as the cryptocurrency market as a whole corrected.
However, the Internet Computer’s proved to be more severe than those of its major blockchain competitors, including Ether (ETH) and Cardano. Overvaluation dangers, it appears, were at work.
In particular, traders valued ICP differently across several cryptocurrency platforms following its first public offering. On the first day, for example, the ICP/USD exchange rate on Binance reached $3,161. Meanwhile, the pair reached an intraday high of $630 on Coinbase.
On May 11, the ICP’s circulating supply was around 134.8 million, compared to a total cap of 469.2 million. As a result, the Internet Computer’s market valuation on Binance was more over $426 billion. It would have made the Dfinity blockchain project the third most valuable behind Bitcoin and Ethereum at the time. On May 11, the market capitalisation of Ethereum reached $482.881 billion.
What’s now for ICP?
Internet Computer is another another project attempting to compete in the ongoing blockchain scalability battle. However, rather than depending on miners and small-scale validators to run a public ledger, Dfinity’s initiative intends to create huge data centres and high-end node computers that may give greater bandwidth to its project.
“If the IC succeeds at replacing legacy IT, there would be no need for centralized DNS services, anti-virus, firewalls, database systems, cloud services, and VPNs either,” also noted Mira Christanto, a researcher at crypto analytics platform Messari.
Following its high-profile listings on various cryptocurrency exchanges, ICP had an impressive beginning. The coin also received backing from a slew of notable investors, including Andreessen Horowitz’s startup firm a16z crypto and Polychain Capital, a crypto-focused hedge fund in New York led by Olaf Carlson-Wee, who formerly worked as Coinbase’s head of risk.
Unrealistic valuations and excessive liquidity towards the start of ICP’s life may have harmed it. Nonetheless, the token has been oversold since its inception, according to the readings of its relative strength index, which may serve as a buy signal for certain traders.