An explosion of Ethereum sales was recorded in the digital asset market at the beginning of the week. It was explained by the experts through the actions of major players who sharply dropped ETH creating a stir and dropping the price of the asset.
The balance sheets of the largest owners of this altcoin "lost weight" by a million ETH as per the preliminary estimates over the past week. After the large holders of Ethereum began to get rid of the cryptocurrency reserves, the coin's exchange rate fell by almost 30%, from $480 to $340. At certain points, the altcoin sank to $320. The last time such an ETH price was fixed was at the end of July this year. Ethereum was trading in the range of $342–$343 yesterday aiming to overcome these barriers.
According to a number of analysts, such actions of major market players are dictated by the intention to withdraw altcoin from exchanges of subsequent use in the field of decentralized Finance (DeFi). However, experts recommend using caution when working with Defi because this is a risky and untested product according to Vitalik Buterin, co-founder of Ethereum.
Despite the number of difficulties, DeFi has become a key driver of the crypto market this year. As of this moment, $7.72 billion is blocked in DeFi protocols which is 14 times higher compared to 2019. At the same time, the new digital sector does not intend to slow down and is ready to develop further.
During this summer, experts have repeatedly recorded an increase in commissions in the ETH network. Analysts attribute this to the growing popularity of DeFi. Many applications related to the DeFi sector operate on the basis of ETH. This greatly overloads the Ethereum blockchain network, resulting in a queue of unconfirmed transactions. ETH users found a way out so they agreed to higher commissions speeding up the operations. This triggered a sharp rise up to almost $15 in the cost of transferring Ethereum wherein at the beginning of the year this figure was only below $0.10.
In the near future, the Ethereum blockchain network is waiting for a fateful change – the transition to the second version of the network (Ethereum 2.0.). This is a highly effective update of previous characteristics with the addition of a stacking function (the cryptanalog of a Deposit with a promised interest income). Such changes are necessary to improve efficiency and eliminate low scalability of the network. The scalability issue is expected to be resolved within the next two years. The Ethereum blockchain network cannot cope with the high load caused by the growth of transactions and the increase in the number of users. Developers believe that the need for change is long overdue.
Experts also considered that the recent stock market correction is an additional factor in the massive sale of Ethereum. It negatively affected the value of risky assets, primarily virtual currencies. As a result, ETH was under attack, the owners of which tried to fix the profit.
The recent large-scale sale of Ethereum does not pose a total threat to the market according to the analyst. Experts in the cryptocurrency sphere consider the mass implementation of ETH to be a temporary phenomenon that will come near in the coming days. They also expect that the digital asset market will stabilize but they also warn of its unpredictability and high volatility.