Is this the bottom for $ESS, or is there more pain?

Price volume analysis suggests over half of withdrawn tokens absorbed as of today.

Essence ($ESS), Earth 2's crypto token, took another dive today to trade briefly below $0.07 to $0.06951 before climbing back to $0.07506 as of writing this article.

Shane Isaac made a comment today on the falling Essence price, attributing it to the 3+ years of backlog of Essence being sold, especially by users who acquired Essence at times when it was easy to mine and saw big gains for some users during resource staking (including subsequent refunds on failed claims).

Furthermore, early users also enjoyed higher Essence mining and better Ether to Essence conversion. Shane reminisced days of "2,500 E-ther converted to 2,000 Essence". Current Ether Essence conversion ratio is just 6.5% i.e. the 2,500 E-ther would yield just 162 Essence, making it hard to mine in the present scenario compared to earlier days in 2021.

He further quelled a rumor suggesting that Earth 2 devs are selling Essence, which he denied stating that Earth 2 or its devs have not sold any Essence nor any team members or developers have received any Essence as of now, and thus all Essence withdrawn is by players. Shane also pointed out to the recent extra 6 million Essence burn which they didn't have to

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E2News $ESS Analysis

E2News collated the Essence withdrawal data since the token went live and analyzed it with the buy/sell volume, to help give some pointers

(click to expand)

• Inputs & Assumptions:- The above set-up allows us to analyze as below:-

  • Essence withdrawal numbers(column #1) as shared by Shane on Twitter and E2O discord on respective dates

  • Price-Vol from dexscreener (Column #2 & #3).

  • We have arrived at approx. Essence volume in token terms by dividing the traded volume by closing price (Column #6 = #3 divided by #2).

  • We then added the day-wise volume to arrive at Cumulative values (Column #4, #7 & #10) and Cumulative Withdrawals till date (Column #11)

• Tokens Withdrawn till date:- A total of ~41 Mn $ESS withdrawals have been processed till date (yellow highlighted cell above in column #11). approximate weighted value of these withdrawals is $5 Mn (purple - Column #10)
  

• Token Trade Volume till date:- A total of $5.2 Mn (green, Column #4) worth of traded volume representing both buy/sell for $ESS, representing approx. ~47 Mn (orange, Column #7) tokens representing both buy/sell

• Calculating approx. Tokens Sold:-

  • Assuming equal split on buy-sell volume, the volume on sell-side can be assumed as 47 Mn divided by 2, i.e. 23.5 million tokens sold (orange, Column #8)

  • Value-wise $5.2 Mn divided by 2 i.e. $2.6 Mn worth tokens sold (green, Column #5).
    

• How many withdrawn tokens have been sold?:- We use the ratio of cumulative sold volume versus cumulative withdrawn tokens, to arrive at these ratios volume-wise @0.58 (Column #12). Thus, from this we could saye that approx. 58% of withdrawn tokens have been sold. However, this assumes no duplicate transactions from heavy traders who buy and sell back and forth. Adjusting for few such users and volume we can say approximately half of the withdrawn tokens have been sold out.

What is next for $ESS price?

As per this analysis, while approx. half withdrawn tokens are sold out, theoretically the other half remains to be sold, which could put more downward pressure if they hit the market.

However, not all users withdrew tokens to their wallets with the intention to sell. There are big holders who are holding their token in off-platform wallets and who haven't participated in selling. Additionally, if we consider Shane's statements that the sellers who largely benefited from staking and refunds have almost sold out their balance, $ESS could achieve some stability.

Can the price go lower? Yes, if the withdrawn supply hits the market and given thin liquidity it could have a further leg down. However as the backlog of users/supply wanting to sell Essence reduces this should ease the selling pressure gradually.