Following crash: Ethereum network heavily overloaded due to panic sales

  • Today’s crash and a huge amount of panic selling have overloaded the Ethereum network to a degree not seen in a year.
  • The average cost of an ETH transaction has risen to USD 0.58, with confirmation taking up to 44 minutes.

The recent market crash, in which Bitcoin fell by more than USD 1,700 within an hour, has also hit the second largest cryptocurrency by market capital hard. Ethereum (ETH) has fallen from over 200 USD yesterday to 141 USD, down around 27 percent at the time of publication. The crash also had a strong impact on the Ethereum network.

As Changpeng Zhao, CEO of Binance, commented, the ETH network was subjected to a stress test due to the increased number of transactions. With a current throughput of up to 15 transactions per second and the numerous use cases, from DeFi to thousands of dApps, the network quickly reached its limits. This resulted in a backlog of transactions, which increased the confirmation time of a transaction on the Ethereum network to 44 minutes, as Zhao noted.

For users of the ETH blockchain, who might wanted to sell their ETH, this meant that a transaction either became very expensive or took a very long time to actually be written into the blockchain. As the analyst company Glassnode stated, Ethereum’s price drop led to massive network congestion, resulting in an average transaction price that reached a 6-month high of USD 0.58.

Panic and Ethereum whales depress Ethereum price

Compared to Bitcoin, Ethereum’s price drop was even more significant. ETH whales reported by Whale Alert may be responsible for this. The largest Ether (ETH) transaction involved 100,000 Eths and was made by a wallet to the American crypto exchange Kraken. As Whale Alert later added, the wallet is believed to belong to the decentralized credit platform Nexo.

In addition, Whale Alert also reported a transaction of 60,173 ETHs from an unknown wallet to Kraken and a transaction of 46,671 ETHs from an unknown wallet to Bitfinex in the last few hours. Overall, the average transaction volume per day rose to an annual high of around USD 4.137 million. The previous high was reached in June 2019 with USD 4.097.

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About Author

Jake Simmons has been a crypto enthusiast since 2016, and since hearing about Bitcoin and blockchain technology, he's been involved with the subject every day. Beyond cryptocurrencies, Jake studied computer science and worked for 2 years for a startup in the blockchain sector. At CNF he is responsible for technical issues. His goal is to make the world aware of cryptocurrencies in a simple and understandable way.

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