Everybody loves Ethereum, but this love may not last long. These 3 experts explain why the DeFi crew is moving to other blockchains.
The debate over the feasibility of using Ethereum as the Swiss Army of the crypto-verse is heating up again now that DeFi, gaming, and NFT are enjoying a recent surge in popularity.
But the outlook is not very positive considering the current state of affairs. The impact of xcessive fees, long confirmation times, and slow updates is starting to worry retail users, techies, and large investors.
Ethereum Developers Should Focus on L1
Faced with the difficulties of delivering a satisfactory user experience, Ethereum developers are beginning to move to rival blockchains that have capitalized on this app migration to expand their reach and increase their own market capitalization.
Blockchains like Solana, Binance Smart Chain, and Avalanche have seen a significant rise during 2021, cementing themselves as more efficient alternatives to Ethereum and its upgrade to Proof of Stake that is not quite there yet.
According to Nicholas Merten, creator of the YouTube channel DataDash, Ethereum’s advantage of being the blockchain used by all is losing ground as time goes on.
In a Twitter thread, Merten explains that the arguments in favor of Ethereum may not hold up over time. He believes that in the end, L2s (scalability solutions built on top of the original blockchain) are impractical and generate little incentive for adoption.
For example, Merten claims that people would rather pay $0.01 in Solana fees instead of paying $0.04 to transact on Polygon —the cheapest L2 solution on Ethereum.
For Merten, Ethereum developers should focus on solutions to make L1s (on-chain transactions) more efficient and less expensive. As smart contracts become more complex, people must pay more fees.
Merten believes that Ethereum needs better marketing. In addition to technical developments, there should be a team capable of keeping the community together and excited.
Three Arrows Capital Abandons ETH and Bets on Avalanche (AVAX)
Interestingly enough, this view seems to be spreading among institutional investors.
Within hours of Merten’s tweet, Zhu Su, CEO and CIO of Three Arrows Capital announced that he had abandoned Ethereum to focus on investments in rival blockchain Avalanche. In fact, his Twitter bio already describes him as an investor in “AVAX, crypto, DeFi, (and) NFTs.”
Zhu Su’s words weren’t exactly pretty:
Zhu Su explains that basically, under current conditions, Ethereum benefits OGs. But within a global adoption framework with new users experimenting with the technology, prohibitive network fees should not be something to deal with on a day-to-day basis.
And Zhu Su is not alone. Even Antonio Juliano, founder of dYdX – a DeFi protocol running on Ethereum – agreed with him (even if the harshness of his words was painful).
Ethereum promises to solve these problems by implementing Ethereum 2.0, a new Proof-of-Stake blockchain that will have minimal fees and a very high level of scalability.
However, this solution is taking a long time, and large investors can only hope that it is not too late once it launches.
Ethereum and Dogecoin Primed for Breakouts As Crypto Markets Gear Up for Bullish December, According to Analyst Justin Bennett
Crypto analyst Justin Bennett says that December could bring rallies to the digital asset markets, with Ethereum (ETH) and Dogecoin (DOGE) potentially at the forefront.
The analyst tells his 91,000 Twitter followers that the dollar index (DXY), which compares the USD to a basket of other fiat currencies, is flashing a bullish signal for the crypto markets.
A weaker DXY often signals higher prices for many assets. Bennett notes that DXY may have just had a failed breakout, and could now be facing downward momentum.
“DXY looks good for a crypto rally heading into December.
Friday’s close back inside this channel indicates weakness. Now for a close below 95.80.
Bennett also has his eye on the chart for the total market cap of crypto (TOTAL). According to him, TOTAL is nearing the end of a large bullish descending wedge. He also notes a divergence between the rising relative strength index (RSI) and the downward price movement. A rising RSI during a downtrend is often interpreted as a hint of a bullish reversal.
“TOTAL falling wedge and bullish divergence developing on the intraday charts.
Something to keep an eye on.”
Looking at Ethereum, the analyst says that next month looks good for the world’s second-largest crypto. Bennett says ETH is “poised to do well in December,” and could already be jostling for a breakout, as long as it sees more volume.
“ETH approaching a breakout level.
Just add volume.”
Also joining the rallies, according to Bennett, is leading memecoin Dogecoin (DOGE). He says DOGE is in the middle of a breakout, with its first key resistance at $0.25, and a final resistance level at all-time highs above $0.75.
“DOGE is breaking out.”
Should Ethereum investors really prepare for a ‘$6000’ December
Ethereum hasn’t had a great time in November. Dropping by more than 9% at one point, the asset continued to decline over the course of the month.
However, the overall view might not be as bad as it seems on the surface. In fact, Ethereum has registered a 0.5% ROI for the month, which means investors would not have lost much even if they had invested towards the beginning of November.
Now, in this article, we will highlight a couple of factors that might suggest patience being rewarded for ETH investors during the last month of 2021. At press time, Ethereum’s market cap had recovered above $500 billion, having appreciated by 7% on the charts.
One of the primary observations seen over the past 30 days is that Ethereum continued to find support between $3800 and $4000. After hitting $4400 in late October, it tested that range again before rising higher on the charts. However, the 2nd half of November led to strong corrections and on 26 November, a significant collapse took place. This range was tested again and now, over the last 30 days, the same price zone has been tested 5 times.
Speculations lead one to believe that Ether may undergo corrections beyond this level after it struggled just above $4000 over the last few days. However, over the last 24 hours, ETH recovered back above $4300.
Now, immediate corrections concerns might have been put to bed and another positive trait can be observed.
Ethereum and its larger plans for December?
Ether’s price chart in the short-term might indicate chaos, but the long-term chart seemed to imply dynamic bullishness. This may lead to a strong December. The asset’s movement has formed a Cup and Handle pattern over the past few months. Keeping a base resistance of $4000, the pattern underwent a positive breakout during the beginning of November.
Now, in the grand scheme of things, the last few weeks of correction were a testing phase down to $4000.
Finally, Ether closed above $4000 yesterday on the weekly chart, emphasizing the presence of long-term bulls in the chart. Hence, technically, if the cup and handle pattern sees a positive turnaround, Ethereum should be expecting a 50% chance of testing a new high at $6000-$6200 over the course of December.
On the question of identifying on-chain proficiency, ETH’s MVRV ratio suggested a buying opportunity. With the value dropping down to zero, it was a sign that selling pressure has more or less fallen for the altcoin. Historically, this has been a good period to buy based on the MVRV, and the overall market is set up in that direction as well.
Bitcoin, Ethereum and Two Smart Contract Competitors Are the Winners Among Institutional Investors, According to Crypto Asset Manager CoinShares
Leading digital asset manager CoinShares says institutional investors have a strong appetite for Bitcoin (BTC) and three leading smart contract platforms.
According to the firm, the overall crypto market correction has left investors hungry for more.
“Digital asset investment products saw inflows of US$306m last week suggesting [a] continued appetite for digital assets.”
As usual, BTC led all digital assets in terms of capital inflows, this time in the wake of a new exchange-traded product (ETP) set to launch on the Deutsche Borse exchange.
“Bitcoin saw the largest inflows in 5 weeks totaling US$247m following the launch of another investment product in Europe. This brings the 11 week run of inflows to US$2.7bn.”
BTC is trading at $58,475 at time of writing, up nearly 6% on the day.
The leading smart contract platform Ethereum (ETH) concluded a strong month of inflows with a week totaling over $23 million.
“Ethereum saw inflows totaling US$23m last week, marking its 5th consecutive week of inflows.”
This week’s big winners in inflows relative to assets under management (AuM) also include the scalable smart contract platform Solana (SOL) and the interoperable blockchain Polkadot, which is designed to support multiple layer-1 smart contract protocols.
“In terms of inflows relative to AuM, Polkadot and Solana continue to be the winners, with inflows representing 8.6% (US$11.5m) and 5.9% (US$14.6m) of AuM respectively last week.”
Ethereum is currently trading at $4,453.79, up 7.5% in the last 24 hours. SOL and DOT are trading at $211.48 and $36.82, respectively, at time of writing.