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Despite $250 ETH Rally, The Altcoin Deals With A Fundamental Blow

07/15/2020

Despite $250 ETH rally, the altcoin is now dealing with a strong, fundamental blow, while still performing well over the past few days with the rest of the crypto market. This strength culminated in a price rally which led ETH to a $250 price level but let’s see what’s in the plan for the asset in the upcoming Ethereum price news.

One trader said that ETH is now on track to hit $300 because of the bullish break of the market structure and it outperforming BTC. Some fear however that the asset could underperform because of fundamental reasons namely the ETH transaction fees that are at high levels. According to the data from ETH Gas Station, the gas price seems to have reached 73 Gwei.

ETH Chart
Chart of ETH’s price action over the past seven weeks from TradingView.com

This means that despite $250 eth rally, the transaction fees were at their highest levels for months, making it quite unsustainable for most users. Even with the initial spike, the gas price remained at 35 Gwei at the time of writing, which is over four to five times higher than the gas price during the price swings. If there is more demand for ETH transactions, the cost to send them will increase. Some analysts believe that the high transaction fees will be the downfall of the altcoin. Qiao Wang, the ex-head of product at Messari said:

 “So long as ETH 2.0 is not fully rolled out, there’s an obvious opportunity for a highly scalable blockchain to dethrone Ethereum. Paying $10 transaction fee and waiting 15 seconds for settlement is just bad UX.”

ETH Gas
ETH Gas Station (site that shows the average transaction fee /gas price) screenshot from Ethereum proponent and writer content creator DeFi Dad @defi dad on Twitter

This sentiment was echoed by Scott Lewis, the co-founder of concourse Open Community and he said that the ETH fees cement the sentiment that ETH hasn’t managed to win over its competitors. Although we have yet to see Ethereum’s dominance under threat, the competitors are gaining strength. Cardano for example, performed extremely well this year. The Altcoin is up by 200% and is trading at $0.13 while ETH is relatively weak 90% since the start of the year. The outperformance is predicted on the launch of the Shelley upgrade:

 “The Shelley era represents the natural maturation of the network, making it more useful, rewarding, and valuable for users new and old. It’s also about preparing for the future. Shelley will set the stage for a fully distributed network, and an entirely new application ecosystem with even greater things.”