Alarming August for Ethereum – Is it over or worst is yet to come?


The month of August saw the-chain-prone-to-hackers’-attacks-Ethereum riding over a contentious curve of price chart, twiddling market cap and finally hitting its rock bottom – causing massive panic attacks inside the crypto sphere.

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Although, Ethereum has been resilient in holding its second rank at the Crypto stage, the overall Market Capitalization shot straight down from 15.80% at this month’s opening to current 13.00% – mirroring the few early days of this year.

The current Market Cap of Ethereum now sits at $28 billion, which was close to hit $44 billion at the start of August; with approx $1.2 billion volume of trade done in the last 24 hours.

“The smart contract build-up platform which had pushed its All-Time high against USD to $1428 in Jan this year has now plummeted down to mere $290, undergoing a negative change of sharp 80%.”

What are the Stats?

The total number of transactions per day has jiggled between 800k and 500k in August, currently seated at around 650k. Pending transactions over the last week saw an upward drift by touching 76k starting from 49k as on 21st August. However, this week dragged down the count to 55k, yet it remained higher as compared to figures after this year’s embark.

Speculations have signaled a direct relation of Ether’s pending transactions to – “trade mining” – a newfangled scheme of profiting undertaken by voluminous centralized exchanges such as Binance, Huobi and KuCoin.
Trade driven mining allows traders to reimburse their transaction fee over an exchange with the native exchange tokens- receiving them for free. This trend was kicked off by Chinese exchange FCoin Official followed by other major Chinese exchanges. Here’s how the exchange tokens have been mooning astronomically:

Traders are even practicing “Wash Trading” and thus multiplying their profits by banking upon the trade volume of these exchanges.

With unprecedented transactions per day, the Gas price has also been puzzling traders with a meandering path touching both highs and lows in August compared to a relatively higher price throughout July.

However, Ether’s Uncle Count (or Orphan rate) has been experiencing a relatively downward path since July’18.

Technical Analysis

The ETH/USD price chart suffered a bear trap during mid-August, shifting the spot-light back over Ethereum, though momentarily. Ethereum also observed slight gains during the same time as was anticipated after Joseph Lubin’s (Co-founder of Ethereum) interview with Bloomberg.

Lubin seemed quite positive against crypto bubble, reflecting upon the “6 big bubbles- each more epic than its predecessor” which they have survived as team thus far.
According to him, “Bubbles have the advantage of bringing attention into the ecosystem; it brings entrepreneurs, developers, money, prospects of building fundamental infrastructure and creating more value.”

 Lubin indeed triggered a price hike, perhaps a momentary one, as compared to the “Two orders of magnitude increase in activity” – experienced during ether’s earlier bubbles.

Considering Ichimoku Cloud which is a strong trading tool to determine whether a trend shall prevail, Ether’s performance during August has reflected a bearish trend on a daily time frame with double settings (20/60/120/30) for more accurate signals.

The price is below the cloud which signal bearish trends, with the Cloud itself being bearish (since red) throughout August. The Tenkan (T) and Kijun (K) cross or TK cross has been showing a bearish momentum, with Tenkan being constantly above the Kiju EMA.

A traditional long entry shall not happen unless the price is above Cloud.

Many believe that the recent cashing out of ICOs over the Ethereum blockchain has pushed the price wheel downhill. This year saw sizeable projects like EOS and Telegram raising a combined US$5.8 bn through their ICOs, which is close to the entire sum of funds raised during 2017.

But the trend has begun to hop on a reverse pedal, with only 33 ICO launches during August- which is the lowest this year. Correspondingly, the funds raised through ICOs are also the lowest during August.

Interestingly, Ethereum has engraved a more responsible version of ICO called DAICO– combination of Decentralized Autonomous Organization and ICO- into its blockchain in Jan this year.
A DAICO setup tosses investors back to the driver’s seat, wherein unsatisfied token holders can vote for refund of their shares. Voters can even adjust the volume of funds to be handed over to dev team, steering sluggish developers back to work!

Introducing DAICO, Vitalik aims to up-root the malicious 51% attack risks against investors by capping the funds with a “Tap Poll” mechanism- held at the 10th day of each month and “Refund Poll”- once in a quarter.

Abyss, a digital gaming platform, is thus far the only DAICO project built over the Ethereum blockchain. Its token sale ended this May, distributing around 508 mm tokens.

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Worst is yet to come?

The not-so-definite future of Casper protocol- which transits Ether into the Proof of Stake mechanism- has surely pushed the prices to new lows. The off-chain scaling solution- Raiden Network, providing bidirectional payment channels to the users, is also yet to run across.

Although the Github platforms for the chain are running actively, shooting commits almost every day, everything boils down to the quality of the commits rather than its quantity. And without actual implementation (which is predicted to be somewhere in 2019-20), it would be harder for Ether to recover from the prevailing downfall.