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The price of Ether has dropped significantly over the course of the last week. After peaking at $486 last Wednesday, ETH dropped as low as $320 before recovering to roughly $336, where it sat at press time.
While we have witnessed a 30% price drop at the beginning of September, more than 68 Ethereum (ETH) whales have been making enormous transactions, adding millions in holdings that way.
As per Crypto Twitter user Ali Martinez, data from analytics site Santiment shows the number of investors holding between 1,000-10,000 Ether (ETH) (around $350,000-3.5 million as of this writing) went up by 68 in only three days since August 31. The ETH price drop that has influenced the number of whales comes while the token fell 30.2% from $367 on August 31 to a monthly low of $326 on September 5.
— Ali Martinez (@satoshilatino) September 6, 2020
Also, data from advanced crypto tracker, Whale Alert, showed that an unknown ETH whale moved 200,000 ETH worth $77.781 million, transferred from an unknown wallet to another unknown wallet just a few hours ago.
🚨 🚨 🚨 🚨 🚨 🚨 🚨 200,000 #ETH (77,781,866 USD) transferred from unknown wallet to unknown wallet
— Whale Alert (@whale_alert) September 4, 2020
Increased Level of Network Congestion
Be it as it may, the rising DeFi market boosted up the demand for ETH starting in June, as did the inclined gas costs, surpassing a high of roughly 485 Gwei on September 1, together with the rising number of transactions per day. Still, the average gas fee now stands at only 98 Gwei following the price drop coupled with projects like SUSHI falling 88% in only 5 days. Just for the reminder, Gwei is a denomination of the Ether and is used on the Ethereum network to buy and sell goods and services. Gwei is the most commonly used unit of ether because Gwei can specify Ethereum gas prices easily. Gas refers to the unit of measure on the amount of computational effort required to execute an operation or a smart contract.
Ether is still considered the second-largest crypto asset by market capitalization at $39.7 billion at the time of writing, with Tether (USDT) standing at $14.1 billion after gaining more than $3 billion on September 1. Currently, Ether is trading at $336.2, having risen 4.44% in the last 24 hours.
This obviously doesn’t satisfy Ether investors who are all wondering why is the price of ETH dropping?
The reason behind the drop lays in, as we already mentioned, the fact that there is an increased level of network congestion that has increased gas prices and slowed transaction times.
Dave Parkinson, the Chief Operating Officer of Lamourie Public Relations explained:
“The number of DeFi projects attempting to run simultaneously on the Ethereum network has inevitably exposed the problems with scalability, the way CryptoKitties did a few years ago.”
Of course, Ethereum founder Vitalik Buterin also reacted and said that the solutions to Ethereum’s scalability problems do exist. The fact is that people just don’t use them.
“To those saying that ‘gas fees are too high’, my answer to that is ‘well then more people should be accepting payments directly through zksync/loopring/OMG’.”
Buterin also before that “up to a certain point”, both Ethereum traders and developers will just have to accommodate to the fact that gas prices may be higher from now on.