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This is the reason why Ethereum [ETH] is yet to hit $5K

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Many people are waiting for ETH to hit a new all-time high at $5K, but it seems a little problematic because of the network state. The average network fee is again very high. The last time that the average network fee was this high was May 12th.

According to the latest analysis tweeted by Santiment:

“#Ethereum is sitting at ~$4,780 at the time of this writing, and optimism that $5k is around the corner appears high. One of the few things holding $ETH back is the fact that the average network fee sits at $63.50, which was last this high on May 12th.”

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The Familiar Challenge

After Bitcoin showed new ATHs in the price chart, many are waiting for other major cryptocurrencies to break records and show new all-time highs. Ethereum can be the next one.

Some people are also thinking about flipping to happen in the charts and Ethereum achieving the first stout of cryptocurrencies list in terms of market cap. Anyway, there are still some burdens in this path for Ethereum because of the biggest challenge this network has, the average network fee.

The network fee or gas fee is one of the shortcomings of Ethereum that has become of bigger challenge in the last two years. After a considerable increase in using this network, we have seen the gas fee increase considerably and is currently $63.50. It means transacting on this network is still very expensive, and it may prevent many people from buying ETH and increasing its price to the optimistic $5K prediction.

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The last time that network fee was this high was on May 12th this year. After that day, the ETH price started to decline, going down to near $1700.

Some experts believe the rise of network fees can result in price corrections in the ETH chart again. When we look at the charts provided by Santiment, we see the price and average network fee having a correlation with each other.

Some cryptocurrency enthusiasts believe that Ethereum can become the first choice for transactions with high value. It means the network stays the same, and the fees may go even higher, but mainstream users won’t use it anymore, going to solutions like Polygon and others.

If this happens, a price correction may be possible again. When the usage of a network goes down, it can mean people aren’t confident about that blockchain anymore.

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But on the other hand, Ethereum can become a blockchain like Bitcoin that its native token has value because of its importance and not necessarily its use-cases.

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Ethereum

Vitalik Buterin proposes calldata limit per block to lower ETH gas costs

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Ethereum co-founder Vitalik Buterin has proposed a new limit on the total transaction calldata in a block to decrease the overall transaction calldata gas cost over the ETH network. 

Buterin’s post on the Ethereum Magicians forum, EIP-4488, highlights concerns regarding high transaction fees on layer-one blockchains for rollups and the considerable amount of time to implement and deploy data sharding:

“Hence, a short-term solution to further cut costs for rollups and to incentivize an ecosystem-wide transition to a rollup-centric Ethereum is desired.”

While the entrepreneur cited an alternative wherein the gas costs parameters could be decreased without further adding a limit to the block size, he foresees a security concern in decreasing the calldata gas cost from 16 to 3:

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“[This] would increase the maximum block size to 10M bytes and push the Ethereum p2p networking layer to unprecedented levels of strain and risk breaking the network.”

Buterin issued a decrease-cost-and-cap proposal, which aims to achieve the goal of reducing unprecedented levels of strain and risk breaking the network, and believes that “1.5 MB will be sufficient while preventing most of the security risk.” As for advice to the Ethereum community, he wrote:

“It’s worth rethinking the historical opposition to multi-dimensional resource limits and considering them as a pragmatic way to simultaneously achieve moderate scalability gains while retaining security.”

If accepted, the implementation of the proposal will require a scheduled network upgrade, resulting in a backward-incompatible gas repricing for the Ethereum ecosystem. This upgrade will also mean that miners will have to comply with a new rule that prevents the addition of new transactions into a block when the total calldata size reaches the maximum. “A worst-case scenario would be a theoretical long-run maximum of ~1,262,861 bytes per 12 sec slot, or ~3.0 TB per year,” the proposal read.

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However, the community is discussing other options like the implementation of a soft limit. Others raised concerns about the congestion during nonfungible token (NFT) sales, which may require users to compensate for the lack of execution gas by paying a higher total fee.

Rising gas fees have resulted in an outflow of users from the Ethereum network to lower the cost of Ethereum Virtual Machine-compatible networks.

As Cointelegraph reported on Nov. 4, Etherscan data shows that approving a token to be transacted on Uniswap decentralized finance protocol can cost as much as $50 worth in Ether (ETH).

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Average Ethereum gas cost. Source: Etherscan

Additionally, layer-two solutions, which were billed as the protocols that would help solve the fee issue, have been charging high fees due to network congestion amid the onboarding of new users.

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Ethereum price could easily double as ETH long term outlook screams bullish

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Ethereum as ultra-sound money
  • Ethereum price has formed a chart pattern on the weekly chart that indicates an optimistic outlook of a 97% ascent.
  • ETH must clear a few critical resistances before the bullish forecast could be validated.
  • Holding above $3,917 is crucial for the token’s rise toward $10,000.

Ethereum price continues to consolidate and discover reliable support above $4,000. ETH appears to be preparing for a massive bull run, as a technical pattern suggests that the second-largest cryptocurrency by market capitalization is looking to double its value in the longer term.

Ethereum price eyes $10,000

Ethereum price has printed a bull pennant pattern on the weekly chart, suggesting that ETH is eyeing higher prices. The prevailing chart pattern suggests that if the token slices above the upper boundary at $5,252, a 97% ascent toward $10,418 is on the radar.

ETH weekly

ETH/USDT weekly chart

The first area of resistance for Ethereum price appears to be at $4,211, where the 50-day Simple Moving Average (SMA) and the 78.6% Fibonacci retracement level coincide. Additional resistance will emerge at the 21-day SMA at $4,421. 

The token’s all-time high at $4,884 will then act as an additional obstacle for Ethereum price, but slicing above this level could unravel further bullish intentions for ETH.

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If Ethereum price manages to break above the aforementioned resistances, ETH may target the last remaining obstacle before the bullish outlook is validated, at the upper boundary of the bull pennant at $5,252. The 97% climb toward $10,418 would then be on the radar, but the token would be confronted by several hurdles, including the 127.2% Fibonacci retracement level at $5,762, then at the 161.8% Fibonacci retracement level at $6,866. 

ETH daily

ETH/USDT daily chart

However, if Ethereum price faces profit-taking, ETH would discover the first line of defense at the September 3 high at $4,020, then at the October 16 high at $3,962. The lower boundary of the governing technical pattern at $3,917, coinciding with the support line given by the Momentum Reversal Indicator (MRI).

Investors should note that if Ethereum price slices below the aforementioned foothold, the bullish thesis may be invalidated and ETH could continue to slide lower, as it searches for reliable support at the 100-day SMA at $3,762, then at the 61.8% Fibonacci retracement level at $3,675. 

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Raoul Pal Details Four Favorite Altcoins After Bitcoin and Ethereum, Outlines ‘Most Important’ Chart in Crypto

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Real Vision founder and chief executive Raoul Pal is updating his followers on his favorite altcoins outside of Ethereum (ETH).

Pal, a vocal Ethereum bull, tells his 795,200 Twitter followers that ETH competitor and smart contract platform Solana (SOL) is one of his favorite altcoins. Solana’s native token SOL, the fifth-ranked crypto asset by market cap, is trading at $200.10 at time of writing, down nearly 7% on the day.

Pal also lists three other smart contract platforms, Avalanche (AVAX), Terra (LUNA) and Polkadot (DOT), among his favorite altcoins.

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AVAX, the 11th-ranked crypto asset by market cap, is trading at $110.06 at time of writing, down nearly 9% on the day. In the same time period, LUNA is down 2.36%, trading at $41.81 at time of writing. DOT, the 9th-ranked crypto asset by market cap, is trading at $35.83 at time of writing, down 11.69% on the day.

Despite listing four smart contract platforms, Pal agrees with a theory laid out by Chris Dixon, a general partner at Andreessen Horowitz, stating that “ETH killers” are a myth.

Dixon believes demand for blockchains will outpace supply.

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Pal also thinks the Ethereum/Bitcoin (ETH/BTC) chart is currently the “most important chart” in the crypto markets.

“The ETH/BTC chart is in my opinion the most important chart in digital asset markets right now. A break higher will lead to more risk-seeking into year-end. BTC will go higher too.”

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Source: Raoul Pal/Twitter

Ethereum is trading at $4,125.15, or about 0.076 BTC, at time of writing.

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