Ethereuem HODL’rs Brace For Wild Ride
As impressive as Ethereum’s (ETH) meteoric rise has been over the last year, the correction it just underwent was more so. After rising more than 1,475% from the 2020 low of $90 Ethereum set a new all-time high of $1,1440 and then went into a tailspin. The price for the world’s second-largest cryptocurrency network by market cap fell 28.5% in a 24-hour period sparking concern a much deeper correction is coming. After all, -20% is a bear market and Ethereum hit -28.5% so fast there was no escaping for many holders and that’s not a good thing for any bull market. So, what is behind this fall and what can we expect in the future?
- HODL - Hold On (for) Dear Life
Contention Within The Ranks Of Ethereum Miners
Ethereum is in the process of a major upgrade that essentially changes everything about the original ETH 1.0 network. The end result is going to be a leaner, safer, faster, cheaper-to-use platform for all the world’s financial needs. Defi needs that is. Between then and now are a series of upgrades, launches, and hardforks that will turn the network into a POS system versus the POW system it is now. One reason for this is high and rising costs to use Ethereum. Ethereum is one of the most expensive networks to use and can cost upwards of $10 per transaction.
That’s why Ethereum co-founder Vitalik Buterin introduced a series of Ethereum Improvement Protocols or EIPs including EIP 1559. EIP 1559 proposes to burn a large portion of all fees (make them inaccessible for any future transactions) as a means of controlling the rising cost and underpinning the overall value of ETH. Opponents to the proposition argue the proposal means paying miners less for the same work and increases the power larger pools have over the entire network. The arguments are not without merit but there are valid concerns with Ethereum’s transaction cost that need to be addressed.
Tether Dollars Surpass ETH On The Tron Network
Coindesk reported that the use of Tether dollar on the Tron network has surpassed ETH for the third week running. Tron is a blockchain network meant to decentralize the web by linking content creators with consumers via smart contracts but that’s not what’s important. What’s important is that while Ethereum’s transaction count in Tether has remained fairly steady over the last few weeks Tron’s has increased from 900,000 per week to over 2.5 million to eclipse ETH and the reason is fees. The fees for transacting across the Tron network are more attractive and sapping potential income, possibly even taking income, that could go to the ETH miners if they can get their fees back in line. While EIP 1559 may not be popular it may be the best option for everyone involved.
Defi Money Still Flowing In
Despite the hurdle of EIP 1559, money is still flowing into the ETH 2.0 Beacon Chain. The total value in ETH locked into the contract rose 10% over the past two weeks to 2.168 million ETH or roughly $2.7 billion. This money will remain locked into the contract for up to a year after the deposit and will serve as the pool of money backing all future transactions on the completed ETH 2.0 network.
The Ethereum Correction Is Nothing To Worry About
As scary as the correction was, it is nothing to be worried about. In fact, HODLrs should rejoice in the move as the periodic corrections are more than healthy, especially considering the nearly 1,500% rise in value. In the technical sense, the correction was triggered by the fresh all-time high and should have been expected, if perhaps not so deep of a correction.
Looking at the correction itself, it doesn’t break the uptrend and in the end, is already confirming it. Not only did the price correction end at the 30-day EMA but it bounced from that level confirming support at the 23.6% Fibonacci Retracement. I know that this technical jargon sounds like a lot of mambo jumbo but remember, the cryptocurrency market is incredibly technical in nature and thrives on momentum. With price action bouncing higher in what can only be described as a trend-following move, a retest of the fresh all-time high is the least of what HODLrs can expect.
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