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Ethereum In ‘Dangerzone’ As Volatility Nears All-Time Lows

Himadri Saha

Himadri Saha | Sep 02, 2019 | 17:09

ethereum in danger zone Ethereum

Ethereum In ‘Dangerzone’ As Volatility Nears All-Time Lows

Himadri Saha

Himadri Saha | Sep 02, 2019 | 17:09


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It seems the second-largest cryptocurrency by market cap only has its ‘second-to-Bitcoin’ status to be proud of.  Market volatility is at a 3-month low compared to bitcoin, according to data from Skew Markets. A host of other indicators are also pointing towards an upcoming ‘danger zone’ situation for Ethereum. 


Low Volatility Means Unattractive Investment

Let’s admit volatility is a necessary evil and something to be totally embraced while participating in the cryptocurrency market.

Volatility opens risk-takers to wild price rides which can result in pretty handsome returns on their investments. A low volatility trend simply means that traders/investors are not interested in playing the asset enough and are looking for something more ‘exciting’.

Markets insight provider, skew markets, charted Ethereum’s 3-month low volatility in comparison to Bitcoin, citing that an all-time low figure (relative) is just around the corner.

ETH is up just is up 31.77 percent on a year-to-date basis compared to Bitcoin, whose valuation within the same period has surged by more than 160 percent. This might also trigger sell offs in the short-term and an investor exodus to greener pastures.

Slowdown In Overall Network Activity

With bitcoin and gold attracting attention as ‘safe-haven’ bets against the upcoming global economic slowdown, Ethereum remains largely neglected. Data gleaned from analytics platform, Etherscan confirms this.

The number of on-chain transactions on the Ethereum blockchain has dropped to pre-December 2017 bull run levels.

ethereum on-chain transactions

Mining hash rate has also taken a big hit and has been struggling go up since February of this year.

ethereum mining hash rate slowdown

 

Technological Dead-End: Ethereum Blockchain ‘Almost Full’

As reported by Bitcoinist earlier, Ethereum’s network utilization has soared above 90 percent. The surge, according to Ethereum co-founder Vitalik Buterin, could prompt transactions costs to increase, making it expensive for corporate users.

In a recent interview with Canadian mainstream news outlet The Star, Buterin said,

Scalability is a big bottleneck because the Ethereum blockchain is almost full. If you’re a bigger organization, the calculus is that if we join, it will not only be more full but we will be competing with everyone for transaction space

It’s already expensive and it will be even five times more expensive because of us. There is pressure keeping people from joining, but improvements in scalability can do a lot in improving that.

Long-time Ethereum critic and Blockstream Samson Mow took this as an opportunity to lash out his highly pungent opinions about the network. Mentioning that it is a dead-end technologically, Mow forecasted that Ethereum would die one day because of its own growth.

Boss Has A Solution, But Will It Work? 

Vitalik recently took to Reddit, in order to address the gnawing issue.

In a thread discussing the effect of Tether’s USDT on Ethereum, Buterin explained that the community should commence a social media campaign on Twitter and Reddit to promote the increase of gas limits. This would help to reduce stress on the blockchain.

While there is no guarantee that such a change would make it to market, Buterin claims that “historically, the large mining pools have listened to community pressure”, and would fold if it benefited the network.

Will Ethereum be able to dodge the grim reaper’s scythe? Let us know your thoughts in the comments below. 


Images via Shutterstock, Etherscan, Twitter: @skew_markets, @Excellion

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