Ethereum traders were feeling the pressure July 18 after average transaction fees on its network surpassed Bitcoin’s for the first time in history.
Ethereum ‘Benefited From Irrational Exuberance’
Data from monitoring resource Coin Metrics uploaded to Twitter Monday confirmed the unexpected reversal of fees, which compound an apparent lack of confidence in Ethereum’s outlook this week.
A day after the fees episode, hedge fund Tetras Capital issued an outright “Bearish Thesis” on Ethereum, warning traders it would “suffer further” after posting bigger gains than Bitcoin last year.
Average transaction fees for Ethereum have surpassed Bitcoin for the first time ever $BTC $ETH pic.twitter.com/6boN8UnShx
— JZay (@BTCOlN) July 17, 2018
ETH/USD was trading just under $500 at press time Wednesday, posting roughly 5 percent daily gains compared with Bitcoin’s 10 percent.
“The recent decline in ETH’s price suggests that the speculation that drove it to new heights over the past year is exhausting. Just as ETH benefited from irrational exuberance, it will inevitably suffer further as the market sobers up,” Tetras opined.
We believe that ETH’s current price is still significantly overvalued; still significantly decoupled from the Ethereum network’s current and near-term technological state. Our research has led us to believe that the market and technology is still far too immature to justify current valuations.
Buterin Estimates $15M Spam Costs
Bitcoin has become considerably more attractive for use as a ‘currency’ in Q2 this year. Uptake of SegWit technology has markedly increased, allowing for fee rates to reduce significantly, often posting averages of just 1 satoshi per byte.
Ethereum meanwhile has seen a recent spate of spam transactions clog up its network – a phenomenon from which Bitcoin previously suffered – pushing up miner fees significantly.
On Monday, co-founder Vitalik Buterin estimated the additional cost to the network from those transactions at around $15 million.
“Free market principles prevent me from being too upset at someone using the ETH blockchain as they wish, but wow,” he commented on Twitter after calculating the figures.
What do you think about Ethereum’s transaction fees surpassing Bitcoin’s? Let us know in the comments below!