The price of ETH joined the first major crypto market drop in weeks. As of the time of writing, ETH has lost about 20 percent in value. Reflecting the moves made on the Bitcoin side, ETH actually dropped further at some point earlier in the day, but is showing some signs of recovery.
Similar to the drop in BTC prices, the drop in ETH price was expected for quite some time. After all, the rallies in both cryptocurrencies have been so strong for so long that a healthy withdrawal had to happen at some point. It now appears that the ETH drop is in signs of a slowdown. Still, the fall may not be over yet.
Why Did ETH Price Drop?
While the BTC rally is partially responsible for the ETH rally (just as the BTC crash could be part of the ETH crash), the cause may not be Bitcoin.
In fact, a number of analysts predicted that Ethereum’s high transaction fees and slow transaction speeds would eventually catch up with the network and currency. Securitize President and Co-Founder Jamie Finn said in a statement last week that as the network is getting more use, it will “cause many developers to look for another chain as it becomes too expensive to perform a transaction.”
Ethereum’s fees continued to rise with the price over the weekend, eventually peaking around $ 1350.
Some analysts believe that despite the recent drop, ETH is still on the rise: the “buy from the bottom” view is a popular phrase on Twitter right now. The Ethereum network is also known to be in an update process, which is thought to be a positive development for the uptrend.
Zumo official Tim Sabanov said last week that “the first phase of Eth 2.0 was launched in December and attracted the attention of validators who want to participate in staking.” He explained that each of these validators must “deposit a minimum of 32 ETH to participate.” He later said the lockdown will continue until the release of Stage 2, which will take place in 2022 at the earliest. He also noted that currently, there are more than two million of all ETH locked on the network, adding that he expects “to increase steadily over the coming months.