Congestion is building on the Ethereum blockchain, the second-largest blockchain, thanks to the recent popularity of dollar-linked "stablecoins" and "decentralized finance" applications like Compound.
And now fees to process transactions, which escalate when congestion is high as some users pay up for faster execution speeds, are soaring to levels not seen since the initial coin offering craze of 2017.
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The fees are known as "gas" and people are starting to complain about Ethereum gas prices, just like motorists whinge about gasoline costs at the pump. One casualty of the spike could be a slowdown in the pace of development of new projects using the Ethereum blockchain.
So the double-whammy of congestion and speculation has driven median gas prices to about 0.008798 ether, which works out to about $3.30, according to data aggregator Blockchair.
“It’s jamming up a lot of decentralized exchanges,” Peter Chan, lead trader for crypto trading firm OneBit Quant, told CoinDesk. “We and a few other market makers have been forced to stop quoting since gas cost is so high.”
Tweet of the day
Bitcoin has erased the dip to $11,300 seen early on Thursday, possibly tracking a continued recovery in gold.
The leading cryptocurrency is trading up slightly on the day near $11,480 at press time. Meanwhile, gold is trading at $1,935 per ounce – up 1.10%. Both assets have recently developed a relatively strong negative correlation.
Bitcoin's drop came after fresh evidence of uptick in inflation in the U.S., even though many investors argue the cryptocurrency should work as a hedge against rising prices.
A U.S. government report released Wednesday showed core consumer prices in the world's largest economy rose last month at their fastest pace in 29 years.
Chainlink (LINK) keeps impressing – The DeFi oracle provider “hasn’t disappointed” when it comes to turning announcements of new partnerships into tangible results, according to Messari, a crypto data provider. “Over 30 projects have fully integrated Chainlink data feeds, most of which went live within the past month,” Messari wrote Wednesday in a daily newsletter. Prices for LINK have jumped eight-fold this year, by far the best performance among digital assets with a market capitalization of at least $1 billion. It's fueled by this year’s rampant speculation over the potential for DeFi (and maybe some marketing help from the so-called LINK Marines),
Yam (YAM) is officially a DeFi meme - In yet another example of just how chaotic the fast-growing (and wildly experimental) realm of DeFi has become, a two-day-old project called Yam quickly built up a market capitalization above $60 million before crashing to $0 early Thursday. Prices for the YAM token had peaked at $167 late Wednesday before spiraling down. The project apparently suffered a bug that led to the loss of $750,000 Curve tokens stored in its treasury. It's not for the faint of heart.
Bitcoin's options market is skewed bullish despite bearish developments on the short-term technical charts.
Call options (bullish bets) are drawing higher prices than puts (bearish bets) on the one, three, and six-month time frames, according to data source Skew. Investors may be selling puts and buying calls, causing calls to trade at relatively higher prices.
Put sellers should note that short-term technical studies are now painting a negative picture. The daily chart moving average convergence divergence (MACD) histogram has crossed below zero, indicating a short-term bullish-to-bearish trend change. The indicator is printing deeper bars below the zero line, suggesting potential for a stronger move to the downside.
Further, the five- and 10-day simple moving averages (SMAs) are charting a bearish crossover and the long upper wicks attached to the recent three-day candles are indicating exhaustion of the broader uptrend.
As such, the path of least resistance appears to be on the downside. The immediate support is located at $11,137 (Tuesday's low), which, if breached, would open the doors to $10,659, a low reached on Aug. 2.
On the higher side, an hourly chart descending trendline, currently placed at $11,600, may offer resistance, which, if violated, would shift the focus to $12,000.
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