Commissions on the Ethereum network rose above $ 1.3 thousand as a result of the collapse of the crypto market on May 19. On the Uniswap decentralized crypto exchange, commissions for quick transactions reached $ 1.35 thousand. The withdrawal of Ethereum and ERC-20 tokens on the world’s largest crypto exchange Binance was unavailable for an hour after the quotes collapse.
On May 19, the cost of Bitcoin per day fell by 30%, reaching a local minimum of $ 30 thousand. However, overnight, the main cryptocurrency of the world won back its positions. Against the backdrop of the collapse, Ethereum fell to $ 1.8 thousand. Thus, along with Bitcoin this week, the largest altcoin Ethereum (ETH) also suffers losses. Cryptocurrency capitalization decreased by almost 25% over the course of a day. Although some analysts used to bet on his spurt to $ 5,000 by the end of May. There have even been predictions that altcoin will rise in price to $ 10,000 by the end of 2021.
Nevertheless, Viewbase data shows that the outflow of ether from exchanges continues. Such a policy of traders suggests that they still adhere to a long-term cryptocurrency storage strategy.
It should be noted that investors withdrawing ether from trading platforms send coins to the ETH 2.0 deposit contract. Now it contains 4 697 890 ETH for a total amount of up to $ 14 billion.
Reasons for the increase in transaction fees
Users of large cryptocurrency exchanges reported disruptions in their work amid a sharp collapse in the rate of Bitcoin and some altcoins. Binance, Coinbase, Kucoin reported various failures. Now the work of the exchanges has been restored.
Due to the collapse the day before, many users turned to decentralized exchanges. This provoked a sharp jump in fees on the Ethereum network and led to the collapse of the cryptocurrency capitalization. As we have already noted, against this background, the Binance exchange suspended the withdrawal of Ethereum for an hour and a half.
The liquidation and leverage also seem to have spurred the cryptocurrency crash this week. Fundstrat founder Tom Lee said in a post-crash report that the leverage provided by exchanges is so great that when cryptocurrencies fall, new traders are always at risk of being forced to sell.
The reasons for such a deep rollback are system overload, liquidation and other factors.
Bitcoin and Ethereum have rocked the markets for perhaps the third time in two months following forced sell-offs. In a market where 100x leverage is not uncommon, crypto dips highlight the extreme downside risks that can hurt investors. However, many consider this to be a feature of the cryptoindustry and not a bug.
At time of writing, the market is showing nascent signs of recovery from the hit, although it may take days to see if sentiment can be stabilized.
Latest Ethereum update
Earlier it became known that the latest Ethereum update fixed a dangerous network vulnerability, which altcoin developers knew about since March 2019. To increase the security of the blockchain, the project team changed the algorithm for calculating the cost of Gas (the currency that is used in the ether network to pay commissions) and made it more efficient. After the release of the Berlin update, the danger of a possible attack on the network has decreased 50 times.