Ethereum: USD/ETH (ETH=) expands blockchain capacity by 25%
Ethereum’s network capacity has been expanded by the mining community to allow more transactions to be processed on the network per second. This is in light of increased traffic on the network, largely due to controversial stablecoin Tether and a gambling game called Fair Win.
Ethereum co-founder Vitalik Buterin relayed last week that block producers were starting to raise gas limits, in light of the network’s congestion. On Ethereum, gas is a separate cryptocurrency used to pay transaction fees and the gas limit essentially controls how many transactions can be included in a block. It’s similar to Bitcoin’s block size limit.
But on Ethereum, gas limits are more organic. Each miner can raise the gas limit by 1/1024 of its current value, slowing edging it up or downwards, as the network gradually adapts to its environment.
Today, miners continued to drive up the gas limit, causing it to break above 10 million per block, an increase of 25 percent over the last week. This means each Ethereum block can now include roughly 25 percent more transactions than they could the week before.
This allows the Ethereum network to process more transactions per second, helping to keep fees lower. But, it does mean the blockchain will get bigger more quickly, making it more expensive and difficult for nodes to keep running the network.
What’s Causing Congestion?
Tether appears to be the main culprit behind Ethereum’s increasing transaction count. Over the past few months, the stablecoin has been removing tethers issued on the Bitcoin network, and replacing them with tokens issued on Ethereum. Since so many Tether transactions are made each day, this has put a lot of load on the Ethereum network.
Addressing the situation in an interview with Canadian outlet, The Star, Buterin remarked, “Scalability is a big bottleneck because the Ethereum blockchain is almost full.”
Earlier this month it was revealed that 25 percent of all Ethereum activity was due to Tether transactions.
But Tether isn’t the only coin taking up such a large amount of the Ethereum network. Fair Win, a blockchain-based betting game, has accrued $1.17 million in transaction fees over the past 30 days, showing that it is responsible for a high number of transactions.
Ethereum transactions have recently starting maxing out blocks. Photo Credit: Coin Metrics
According to intelligence provider Glassnode, Decentralized Finance (DeFi) apps are also putting strain on the network as they are become more popular. It notes that around 45 percent of transactions were made by smart contracts—largely used by DeFi applications.
The issue reached fever pitch on September 20, when Ethereum’s daily transaction fees surpassed Bitcoin’s for the first time since March 2019. At the time, Ethereum users paid $207,000 in transaction fees versus just $180,000 for Bitcoin. Ethereum diehards saw this as a good thing because it showed that the network was seeing high demand.
But Ethereum rival, Tron CEO Justin Sun took advantage of the situation, encouraging people to use his network for lower fees. In the past he has tried to tempt Ethereum developers away from the platform, offering grants, but with little success.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
The projected upper bound is: 192.73.
The projected lower bound is: 141.45.
The projected closing price is: 167.09.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 20 white candles and 30 black candles for a net of 10 black candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 31.2618. This is not an overbought or oversold reading. The last signal was a sell 3 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 36.91. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 5 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -121.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 3 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 1 period(s) ago.
Rex Takasugi – TD Profile
FOREX ETH= closed up 3.240 at 168.250. Volume was 39% below average (neutral) and Bollinger Bands were 10% wider than normal.
Open High Low Close Volume___
165.770 175.410 161.500 168.250 42,719
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 202.21 190.54 207.07
Volatility: 146 86 88
Volume: 82,056 66,529 62,721
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX ETH= is currently 18.7% below its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of ETH= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on ETH= and have had this outlook for the last 12 periods.