Ethereum (ETH) Drops 2% in Broader Crypto Market Sell-Off
The cryptocurrency market is currently in a free fall with Ethereum (ETH) being the biggest casualty. In the last 24 hours, the coin has lost almost 20%.
Ethereum dropped to lows of $153.79 from $190 before it rebounded slightly to the present price of $168. This is the lowest the price ETH has been for three months, and it seems the fall is not yet over. There is uncertainty in the market, and most investors are currently heading to Tether, which has the backing of the US dollar for safety purposes.
It is still unclear what might have startled the market, but there is a possibility that the launch of Bakkt had something to do with it. Investors had banked on Bakkt to deliver real volume in its Bitcoin futures contracts, but that didn’t happen. On the day of the launch, Bakkt only managed to pull less than a million surprisingly low dollars.
The Ethereum network has, as of late, witnessed more traffic, which is largely due to the activity around Tether. Following the increased capacity, the network is expanding to accommodate more transactions.
Last week Ethereum cofounder Vitalik Buterin indicated that block producers were raising gas limits to deal with growing congestion. Gas is the crypto used for paying transactions, and it essentially limits the transactions you can include in a block.
With the expansion, miners can now drive the gas limit up above 10 million per block, which is a 25% increase. Each Ethereum block can now include 25% more transactions, which allows the network to process extra transactions per second, thus lowering the fees.
Tether is behind the increasing transaction count on Ethereum. In recent months the stablecoin has been substituting Tethers distributed on the Bitcoin network with those issued on Ethereum. With more transactions happening daily, this has put pressure on the Ethereum network.
Featured image: DepositPhotos © Syda_Productions