Ethereum has been in the news for the downward movement in its price for the past few days. It has already lost $200 of value at one point and as per the recent reports, the price drop has actually been a result of the dumping of 1 million tokens by the top 100 ETH exchange addresses.
So, what has been the true reason for the recent ETH price dump?
Until recently, which is before the period when the price dump happened, ETH was literally enjoying its run. ETH the second-largest Cryptocurrency in the world was sitting at a peak when its market cap touched a new high, rather a two-year high at $490 and back then, the community over-impressed with its performance was wondering when it would touch $500.
However, there was a major reversal that took place after that. Instead of reaching out for another milestone, its value started plummeting low and very rapidly. The asset movement went below $400 before reaching the pit bottom at about $310, losing a massive 35% in the entire story.
According to Santiment, Ethereum whales could have been one step ahead of the curve of what was to be. When the ETH prices were increasingly trying to reach the anticipated levels of high, the top 100 exchange addresses began removing their tokens. The company came to the conclusion that the addresses in actuality had disposed of their tokens and decreased its holdings from 16.92 million to 15.89 million in the last week. The drop has sure been significant because a 6% drop in holdings means a lot in terms of value. Santiment believes that this kind of dump has huge repercussions on the value of the asset.
Also, a recent report pointed out that the number of developers who are utilizing the network is also increasing since 2018. The downloads of Ethereum-specific code packages have also surged in 2020 exceeding the joint download figures of 2019 and 2019. The Medalla testnet has also pooled in 1.1 million test Ether which is again a huge increase than what it was a week prior. Before the official launch of Ethereum 2.0, Medalla serves as the final testnet. This will help in the transition from the present Proof-of-Word consensus algorithm to Proof-of-stake. There already are 38,000 active validators who have staked their ETH and are already getting their returns.
For every good news, there is a flipside. For example, while the increasing number of users means that the number of people using the blockchain are increasing, it also has brought in several issues along with it. With increasing activity comes a network that is clogged and a mempool that displays 16,000 pending transactions as of the latest figures. We do not even have to discuss the huge increase in the gas fees on the network.
Beginning this month, the average fees paid has jumped to its highest at $6.60. ETH miners have definitely benefited with huge profits but users are still waiting for the release of ETH 2.0 which they hope will reduce the issues.