Everything is going as expected and as seen by the crypto market so many times.
The market has been given a Thanksgiving sale as the price of Bitcoin fell hard, to about $6,300 level.
This obviously led to an even bigger sell-off in the price of the altcoins.
After the rally seen by the cryptos in the past few weeks, a correction was expected, and retail flows into the sector further meant “it’s time to be cautious.”
ETH Got Cheap Again
The second-largest cryptocurrency market cap went down to as low as $480.
Just the day before yesterday, ETH went as high as $620, a level that was last seen in May 2018, thanks to the confirmation of the ETH 2.0 launch on December 1st.
“While Bitcoin has understandably dominated market attention over the past number of weeks, Ether has been quietly building steam in its shadow,” said Konstantin Richter, founder of Blockdaemon. As ETH 2.0 comes closer, “market confidence is peaking,” he said.
After reaching the $600 mark, Etherem faced strong selling pressure. As per the IOMAP indicator of IntoTheBlock, “the strongest level of support for ETH is located between $531 and $547, where 499k addresses previously bought 6.43m ETH.”
As a result, on several of the top centralized exchanges, the funding rate for Ethereum got positive, meaning long traders started paying the shorters to keep the price of perpetual futures contracts near the index price.
Then last night, the price of ETH dropped more than 20% to $480, seen last Friday only.
At the time of writing, ETH/USD has been trading around $500 with $3.4 billion in ‘real’ trading volume.
And Network Becomes Too Costly
Not just ETH but DeFi tokens much like most of the cryptocurrency market are in losses; these cryptos are actually down 15% to 30%.
CREAM, up 14%, is among a handful of tokens that are in the green at the moment.
As a result of these losses, people are changing their positions, and a lot of activity on the Ethereum network is leading to a surge in gas prices.
“Gas has exploded higher since the flush. DeFi traders are active rebalancing positions,” noted trader and economist Alex Kruger.
Ethereum gas fees have surged to 180 Gwei, up 200% from yesterday’s 60.7 Gwei, as per Blockchair.
Earlier this week, the gas fees went down to 29 Gwei, declining from the Sept. 17 high of 539 Gwei when DeFi was topping out.
As such, average Ethereum fees went up to $7.48, an increase of 236% from yesterday’s $2.28. The all-time high in average fees was achieved on Sept. 2nd at $15.2.