Curiously, notwithstanding Ethereum’s recent price declines, many conventional financial supporters remain optimistic on the cryptocurrency. On Tuesday, the digital asset dropped by almost 20%. As per CoinGecko, ETH was changing hands at $3,354 while writing this article, a decline of 11.1% on the day.
In the last week, the value of ETH has also fallen by 2.5%. The CEO of Alameda Research, Sam Trabucco, shared his thoughts on the current drop in ETH pricing. He claims that the circumstances before a price reversal are nearly similar every occasion.
Futures contracts initially trade at a significant premium, suggesting that buyers are active. Following that, a sharp price correction occurs, providing traders with an excellent opportunity to purchase the decline. Furthermore, the sudden increase in transaction costs on the Ethereum blockchain may have caused the drop.
This, according to Ethereum creator Vitalik Buterin, is due to a rise of non-fungible tokens (NFTs) on the platform. To address the problem, he suggested shifting NFTs completely to layer-two (L2) solutions on the Ethereum Research blog. Attack vectors and a level of centralization are now present in Ethereum Virtual Machine (EVM)-capable rollups.
As a result, NFTs ought to be cross-roll-up compatible before a viable method is discovered. NFTs should be able to migrate across the whole L2 environment until a single rollup addresses centralization and safety concerns. His proposal has, predictably, sparked discussion in the crypto world. Nevertheless, the idea has sparked new growth opportunities for L2 scaling approaches.
Furthermore, daily trading volumes on Ethereum’s layer-2 have just surpassed those on Bitcoin’s layer-2—roughly 250,000. Evan Vas Ness, the creator of Week In Ethereum News, tweeted these Coin Metrics data. Flippening, a conceptual notion which is yet to become a fact, has entered the scene once more.
The phrase describes a situation in which an altcoin outperforms Bitcoin with respect to market capitalization. As a result, Bitcoin’s supremacy would cease, and other currencies would not be affected by BTC’s fluctuations. Because Ethereum layer-2 transactions have surpassed everyday transactions, flippening has resurfaced.
However, at the time of writing, BTC had a market value of $870 billion, whereas ETH has a market cap of $397 billion. Notwithstanding Ether’s price drop, the enormous changes in its network continue to present a favorable image for several experts. The Standard Chartered analysts are sure that “while likely rewards for ETH may be larger than for BTC, dangers are also bigger.”