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Ethereum (ETH) in Free Fall, Down 34% Following Bitcoin Cash Idea

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  • Ethereum (ETH) slides 34 percent as bears step up
  • Bitcoin Cash may be used to temporarily solve Ethereum’s scalability problems

Vitalik has an audacious plan of integrating Ethereum with Bitcoin Cash before ETH 2.0 full activation. However, there is resistance from some quarters with a majority against his idea. In the meantime, bears are in full throttle as ETH slumps 34 percent from last week’s close.

Ethereum Price Analysis

Fundamentals

Regardless of how Ethereum supporters try to scrutinize the platform’s performance, everything will boil down to scalability. Striking a perfect balance and ticking all the boxes satisfying the requirements of the blockchain trilemma is hard.

Therefore, while the developer community agitates for scalable networks, it all about making good choices. Presently, Vitalik and team chose decentralization and security over scalability. Limiting as it is, that is not stopping project managers from flocking and launching dApp from the platform. And Joseph Lubin, in an interview, said the network, despite challenges, has to some extent scaled:

“So, I think we’re at many tens of thousands of decentralized transactions per second on the Ethereum network right now. And another point that I believe is that we’ve got all this scalability for specific use cases.”

Therefore, the idea that Vitalik is putting forth is off-putting for Ethereum developers. While it could work considering Bitcoin Cash recent hard forks and their working towards inherently scaling the network

without layer two options like in Bitcoin, his choice didn’t bode well with developers. Francis Pouliot saidVitalik’s proposal is an admission of failure:

“The shitcoin has hit a three-year low versus Bitcoin. The founder has all but declared the project a failure today by proposing a humiliating BCash integration to delay the (yet unsolved) scalability crisis.”

Candlestick Arrangements

Ethereum ETH

Presently, the cryptocurrency scene is all red. Leading the plunge are periphery altcoins. Compared, ETH performance, considering its liquidity, is worse. Printing double-digit losses in the last week, bears are firmly in charge.

Note that despite the optimism, the fact that prices are now trading below the $230 support and sell trigger is a mark of bears. As such, and in line with previous ETH/USD trade plans, every pullback towards $230, which is previous support now resistance, is an opportunity to unload the coin at higher prices.

Ideally, and in a typical move, better reloading opportunities will be at $190 and $150 if sellers’ momentum is high.

Technical Indicators

Anchoring this trade plan is May 16 bull candlestick. With high trading volumes of 822k, the bar is visible and leading. Therefore, signaling the end of a retest will be a wide-ranging bull candlestick reacting either at $170-$190 support zone or $150 which is April low, distinct with high participation preferably exceeding 822k of May 16.

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VITALIK BUTERIN: ETHEREUM FOUNDATION MADE $100 MILLION BY SELLING ETH AT ATH

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According to a recent statement by Vitalik Buterin, he managed to convince the Ethereum Foundation to sell 70,000 ETH at the height of 2017’s parabolic run, resulting in a $100 million liquidity.


ETH is still the second-largest cryptocurrency by market cap. However, its price today is nowhere near what it used to be two years ago. Volatility has taken a hit and a break out seems all the less likely.

ETHEREUM FOUNDATION SOLD 70,000 ETH

But the Ethereum Foundation has had the financials already sorted. It so happens that co-founder Vitalik Buterin managed to convince the EF to sell up to 70,000 ETH when the coin peaked in late 2017 and early 2018.

This resulted in instant liquidity of around $100 million, assuming that they sold at the absolute peak when the price was flirting with the $1,400 mark. Buterin revealed this information in a recent conversation with Eric Weinstein, a well-known podcaster who is also Thiel Capital’s managing director. Buterin leveraged the ETH rally to make some serious money for himself too. He sold an estimated 30,000 ETH, which was worth approximately $22 million at that time.

This move made many question EF’s motives. Quite a lot in the community thought they did so as they spent all of their fiat reserves. According to Buterin’s reveal, this should not have happened so far.

In other words, the reason for this was likely a policy decision, rather than a lack of funds.

CRYPTO WAS NOT READY TO BE AS VALUABLE AS IT WAS

When asked what he thought about

the prices going down, the Ethereum leader admitted that he was relieved when it happened. According to him, the crypto industry has yet to create enough value to actually be worth half a trillion dollars.

Buterin noted that he never shorted, but he did convince the EF to sell quite a bit of ETH. As mentioned earlier, he did it as well, although he did not say that in the interview. However, this is not really surprising, as many other prominent crypto figures did the same. One of the best examples of this was Litecoin’s Charlie Lee, who was criticized for the move, as many believed that he might be dumping the coins due to some knowledge that was unavailable to the wider community.

Lee commented on his decision, stating that it would be a conflict of interest for him to hold LTC and tweet about it. He has a lot of influence in the crypto industry, and any attempt to praise the project might have been taken as an attempt to increase his personal wealth. With no LTC in his wallets, he became free to speak about the project’s value freely, without having to face such accusations.

As for Ethereum itself, the coin’s price is currently far below its $1400 peak, sitting at $144.09 at the time of writing. However, Ethereum is still the leading development platform, with new dApps, smart contracts, altcoins, and other products being created on it almost every day. Its market cap currently sits at $15.6 billion, while at $7.35 billion, ETH’s trading volume is about half of that figure.

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Ethereum will conduct Muir Glacier hard fork

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  • During yesterday’s Core Devs Meeting, the Muir Glacier hard fork was finalized.
  • The activation of the hard fork will take place at block number 9.069.00, presumably on 04 January 2020.

The core developers of Ethereum confirmed the Muir Glacier hard fork yesterday and thus the delay of the Difficulty Bomb by 4 million blocks. At the Ethereum Core Devs Meeting #77, which took place yesterday, the participants stated that there is a common consensus in the Ethereum community about the activation of EIP 2387. This will delay the Ethereums “Iceage” by 4 million blocks, equivalent to about 1.7 years.

The biggest concern in the community was the long delay of 1.7 years, as this could lose an incentive to complete Ethereum 2.0 quickly. Eric Conner, developer of Gnosis, refuted this argument and explained in the Ethereum Magicians chat:

I REALLY DON’T KNOW WHY PEOPLE KEEP ASSOCIATING THIS WITH ETH2 DEVELOPMENT. YES THE ORIGINAL IDEA WAS TO NOT ALLOW STAGNATION BUT THAT’S AN ANCIENT THOUGHT AT THIS POINT. AS PETER HAS ALREADY POINTED OUT, ETH2 IS NOW MOSTLY ENTIRELY INDEPENDENT OF ETH1. […] WE SHOULD REALLY STOP COMBINING THESE TWO IDEAS. A DELAY IN THE DIFFICULTY BOMB IN NO WAY DELAYS ETH2 DEVELOPMENT.

As Hudson Jameson stated at the Core Devs Meeting, the period could also be shortened later in a hard fork if there is a need. For the activation of EIP 2387, however, this question does not represent an obstacle, so the unanimous opinion, as to why the EIP was finalized.

Another objection was that the incentive for the miners to upgrade could be lost if the Difficulty Bomb is further delayed. Tim Beiko explained in ETH Magicans chat that the completion of Ethereum 2.0 fits very well into Muir Glacier’s schedule and that both should occur at about the same time:

WITH REGARDS TO THE FINALITY GADGET, I DOUBT WE’LL SEE IT LIVE ON MAINNET IN <1 YEAR. THIS WOULD COME

FAIRLY CLOSE TO THE ~1.5 YEARS IN WHICH THE BOMB WOULD GO OFF AGAIN. IF A LARGE MAJORITY OF ETHEREUM USERS & INFRASTRUCTURE PROVIDERS CONSIDER THE FINALITY-GADGET CHAIN TO BE THE CORRECT ONE, THEN MINERS HAVE AN INCENTIVE TO FOLLOW THAT CHAIN GIVEN THAT IT WILL BE “ETH” AND HAVE MOST/ALL ACTIVITY/ECONOMIC VALUE TIED TO IT.

The activation of the Muir Glacier hard fork is planned for block number 9.069.00. Due to a difficulty upgrade in a few days, the exact date is not yet exactly predictable. However, as Péter Szilágyi explained during the call, the Muir Glacier hard fork is likely to take place on January 04, 2020.

What is the impact of Ethereum Muir Glacier hard fork?

The Ethereum Improvement Proposal (EIP) for Muir Glacier was published at the end of November with EIP 2384 and later concretized by James Hancock with EIP 2387. The EIP, known as “Muir Glacier”, will further delay the Difficulty Bomb in the Ethereum Network.

The Difficulty Bomb, along with the retargeting algorithm, is responsible for Ethereum achieving a constant block time. The retargeting algorithm ensures that if a block time is greater than 20 seconds, the difficulty level is reduced, and if a block time is less than 10 seconds, the difficulty level is increased. This mechanism leads to an increasing difficulty of ETH to mine, which in turn leads to an increased time expenditure for the extraction of a new block.

This mechanism serves as a deterrent to miners who may choose to continue with the Proof of Work (PoW) even after Ethereum has switched to the Proof of Stake (PoS) with Ethereum 2.0. However, the Difficulty Bomb occurred earlier than expected and became increasingly apparent, with average block times increasing by almost two seconds within a month. In response, Muir Glacier was proposed as an “emergency” hard fork, which is now expected to be activated on January 4th.

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Last Updated on 14 December, 2019



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3 reasons why Ethereum fundamentals are strong: ConsenSys co-founder

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Ethereum has seen an increase in user activity throughout 2019. Backed by the strong growth of DeFi, the ecosystem is expected to expand rapidly entering into 2020.

According to Joseph Lubin, the co-founder of ConsenSys which is considered to be the largest blockchain development software firm, the fundamentals of Ethereum are strengthening.

Optimistic numbers for Ethereum

According to Lubin, since 2019, more than 20 million Ethereum accounts were created, $650 million has been locked into DeFi, and 4.5 million ETH has been issued from block rewards.

The growth of DeFi, as reported by CryptoSlate, directly affected the rise in the user activity of Ethereum in recent months.

The ConsenSys team explained:

“The amount of ether locked in DeFi increased dramatically over the course of this past year recently surpassing $650 million. Ether has become the go-to collateral asset for defi platforms and applications.”

The overwhelming majority of DeFi users utilize ETH as the default collateral to process various financial activities across lending, derivatives, payments, and decentralized exchanges (dexes).

In the medium to long-term, efforts to scale the Ethereum network would further boost the practicality of DeFi-related services.

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Number of unique Ethereum addresses continues to increase (Source: Etherscan.io)

With the increase in the number of active decentralized applications (DApps), both on-chain and off-chain infrastructure of ETH will have to improve to support the emergence of may new applications.

What will push ETH further?

Both the ecosystem and foundations surrounding Ethereum are trying to position the network to scale over the coming months to create an efficient ecosystem for developers.

ConsenSys, for instance, said in its report that it plans to bring one million developers into the Ethereum ecosystem. Various studies have indicated that developer activity is often an accurate indicator of a cryptocurrency’s price trend. The ConsenSys team said:

“ConsenSys launched its initiative to bring 1 million developers into the Ethereum ecosystem. This year a lot more effort went into analyzing developer communities. At the midway point of 2019, Electric Capital released a report showing that Ethereum’s developer community is 4x larger compared to any other crypto ecosystem.”

The main criticism towards Ethereum by developers of competing blockchain networks, however, has been the struggle of the Ethereum community to adopt scalability solutions quickly due to its size.

The Ethereum developer community being bigger than most other communities is a net positive, but can be a negative factor in implementing major solutions to scale the network.

All developers on Ethereum agree that the network has to scale to supplement its growth. Whether it can be done soon enough to in proportion to the rise of DeFi and DApps still remains uncertain.

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