Ethereum price stagnates as miners plan a possible revolt
Ether’s rise in relation to Bitcoin over the last few days has been quite lackluster when compared to previous surges.
- Ether is currently showcasing weekly gains of around 8%.
- Ethereum’s upcoming improvement proposal – EIP 1559 – has been met with a lot of resistance from a section of its mining community.
- The miners are reportedly in possession of enough network resources to facilitate a 51% attack if they wish to do so.
Over the course of the last few days, Ether has shown an increasing amount of stability, with the premier crypto staying afloat above the $1,800 mark for nearly five days running. In this regard, it bears mentioning during yesterday’s trade cycle, ETH touched a price point of $1,933 only to dip once again. At press time, the altcoin is trading at $1,880.
While Ether’s performance has been quite impressive recently, when comparing its 7-day gains with those of Bitcoin, it becomes clear that the altcoin has not been able to surge as many had previously expected. Traditionally, whenever BTC swings big, ETH seems to follow suit. However this time around, while BTC is up nearly 17% over the last week, ETH has only been able to gain just 8%.
To get a better idea as to why Ethereum’s value may be stagnating, Finder reached out to Konstantin Anissimov, Executive Director at cryptocurrency exchange CEX.IO, who opined that this is not the first time that Ethereum’s performance has been brought into question especially since the coin has previously exhibited similar behavior around February 11th, adding that at the time, Willy Woo, a popular crypto analyst, stated that a possible explanation for the stagnation could be that while BTC is a better multi-cycle HODL, ETH is a better mid-macro swing trade.
Similarly, providing his views on the subject, Petr Kozyakov, co-founder and CBDO of the global payment network Mercuryo, opined that due to the tremendous network congestion being faced by the Ethereum network, the ecosystem has been faced with skyrocketing fees making most DeFi platforms unusable. This has resulted in many Ethereum users seeking refuge in alternative blockchains, hampering the coin’s growth substantially. He added:
“The stagnation of Ether in relation to Bitcoin may also be attributed to the increased interest in the prospects of Ethereum 2.0, the Proof-of-Stake model which is being subscribed to by investors, or validators as the case may be. The PoS model is what the Ethereum Foundation hopes will provide the final solution to the current challenges the blockchain is experiencing.”
Rebellion brewing behind the scenes?
As pointed out by Finder earlier, Ethereum developers recently proposed a network upgrade called EIP-1559, which seeks to help mitigate many of the gas fee issues currently being faced by the network. The upgrade is expected to go live sometime in July and will look to send a part of every transaction fee to the Ethereum network itself. This ETH would then be burned, thereby reducing the total number of tokens in existence.
Another facet of this upgrade worth highlighting is that it seeks to reduce the total amount of rewards being received by the network’s miners. This aspect has resulted in many Ether miners voicing their displeasure and even protesting the move by threatening a demonstrative “network takeover“. While the group claims to not be looking to overthrow the network, they wish to show that they do in fact possess the ability to facilitate such an attack.
In reaction, Vitalik Buterin, co-founder of Ether, and other prominent devs associated with the network have gone on to say that they are bolstering their defensive efforts by initiating certain small modifications to either the ETH PoW (proof-of-work) framework or the network’s various beacon clients. In this regard, a blog post released by Status read:
“Like clockwork, the Ethereum community has quickly organized potential solutions to this possible 51% attack. Vitalik describes how Ethereum can perform a ‘quick merge’ by rapidly moving from proof-of-work to proof-of-stake with limited changes required to Ethereum clients,”
What lays ahead?
In its most basic sense, Ethereum 2.0 can be thought of as a scaling effort that will look to transition the network from a proof-of-work to a proof-of-stake (PoW) mining consensus. The effort has been in the pipeline for many years now but Buterin’s latest proposed framework seeks to expedite this process.
Lastly, the aforementioned blog states that the EIP-1559 opposition group has, on paper, gathered enough resources to facilitate a 51% attack. Thus, it will be interesting to see how the coming few days play out.
Disclosure: The author owns a range of cryptocurrencies at the time of writing
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