Ethereum Drops 9%. Is This a Buying Opportunity?
Should you buy Ethereum on the dip?
Cryptocurrencies fell across the board yesterday after Tesla CEO Elon Musk raised environmental concerns about Bitcoin, the world’s biggest cryptocurrency.
Ethereum, which is sometimes seen as silver to Bitcoin’s gold, initially fell about 9% on the news, though it recovered later in the day. According to figures on Coinmarketcap.com, the whole market was down yesterday due to fears that Musk had gone cold on cryptocurrency as a whole.
Musk tweeted: “Tesla has suspended vehicle purchases using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
Environmentalists have been increasingly vocal in raising concerns about cryptocurrency’s carbon footprint. Digiconomist’s Alex de Vries, who studies Bitcoin’s energy consumption, reports that a single Bitcoin transaction has the same carbon footprint as over a million Visa transactions or almost 90,000 hours of watching YouTube.
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On top of this, De Vries says the digital currency doesn’t use as much renewable energy as people like to think. He believes a recent blackout in China’s Xinjiang province confirmed that “a substantial part of the Bitcoin network is being fueled by Chinese coal in Xinjiang.”
The reason Bitcoin has such a big carbon footprint is that it uses something called “proof of work,” or (PoW), to maintain the integrity of its network.
Since blockchain is not secured by an outside party like a bank or government, each individual block in the chain needs to work together to secure the network. When a new block is mined, it needs to do two things:
Validate transactions to prevent fraud or double spending
Solve a puzzle to generate a unique number – the first to solve the puzzle gets to mine the new block
The puzzle solving is a key part of the blockchain cryptography. The idea is to ensure that only one new block is created every 10 minutes. So as Bitcoin becomes more valuable and companies invest more money – and more computing power – in mining it, so the puzzle becomes harder. By design, PoW is not energy efficient.
Ethereum also uses the PoW model, but it uses about a third of the energy of Bitcoin each year. And Ethereum is in the process of upgrading to a new, more efficient system called Eth 2, which will cut its energy consumption by 99%.
Bitcoin vs. Ethereum energy consumption:
Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE) - Sharp Bounceback After Another Elon Musk Tweet
Bitcoin (BTC/USD), Ethereum (ETH/USD), and Alt-Coin Analysis and Charts:
Bitcoin , Dogecoin weekly losses being pared back, Ethereum ahead of the game.
The power of Elon Musk’s tweets may spell problems.
The cryptocurrency has had a turbulent few days with a tweet by Elon Musk sparking a heavy sell-off on Thursday before another tweet less than 24 hours later sent prices charging higher again. Market leader Bitcoin continues to underperform however and is currently -10% over the last 7 days, while Ethereum is +15% on a weekly basis. Across the spectrum, there are weekly winners and losers with Dogecoin down 11%, Cardano up 9%, Ripple down 16%, and Telcoin up 22%. A look at the top 100 coins by market cap shows far more losers than winners over the week, but these losses are currently being eroded away.
This week’s market sell-off was sparked by Tesla boss Elon Musk halting car payments in Bitcoin, bringing down another Musk favorite Dogecoin at the same time.
Bitcoin (BTC) and Ethereum (ETH) Crushed, Dogecoin (DOGE) Slumps 20% as Tesla Halts Bitcoin Payments
Late Thursday, Elon Musk then tweeted that he would work with Doge developers to ‘improve system transaction efficiency’ a bullish signal for the 4th largest coin by market cap.
Dogecoin (DOGE) Rallies Sharply on Elon Musk Co-Operation, Coinbase Adoption News
Elon Musk’s tweets are closely followed by the cryptocurrency and the volatility that they can cause is well known, especially for Musk’s favorites, Bitcoin and Dogecoin. The week’s sharp moves however show that the power of his tweets can move the market as a whole, a very unwelcome situation, even for the avid volatility chaser. Either that or the market as a whole is becoming very nervous about current cryptocurrency levels. Volatility is good, excessive short-term volatility is not.
The daily BTC chart remains neutral with yesterday’s sell-off candle in control of current price action. Bitcoin’s market dominance is now below 41% and continues to lag Ethereum. To regain an upward bias, BTC needs to open above yesterday’s high print at $52,900 and break above both the 20- and 50-day simple moving averages at $55,000 and $$56,100 respectively. The market is oversold, using the CCI indicator, suggesting that Thursday’s low at $46,070 is unlikely to be troubled.
Bitcoin (BTC/USD) Daily Price Chart
Ethereum is back around the $4,000 level and looking to haul back all of Thursday’s losses. Ethereum continues to outperform the market as a whole and now has a 20% market dominance. While Bitcoin is currently twice the size of Ethereum, this differential continues to contract with the Ethereum/Bitcoin spread now at 785 from a low of 228 at the end of December. Much has made of the Ethereum overtaking Bitcoin to take the top spot – the flippening – and as things stand, this is looking every more likely.
Ethereum (ETH/USD) Daily Price Chart
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What are your views on Bitcoin (BTC),Ethereum (ETH), and the Alt-Coin Market – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
Ethereum is over $4,000—here’s how much money you’d have if you invested $1,000 at the beginning of 2021
Just a week after dogecoin’s massive rally, during which the coin surpassed the 70-cent mark for the first time in the lead-up to Elon Musk’s hosting appearance on “Saturday Night Live,” ethereum is taking its turn in the spotlight.
The coin has been on a massive tear in recent days, nearly doubling in value over the past month. The world’s second-biggest cryptocurrency by market cap now costs more than $4,000 per coin, a far cry from the $176 it was commanding a year ago.
Unlike dogecoin, whose rise has been fueled by tweets and Reddit threads, ethereum has support from institutional investors and has been the cryptocurrency of choice for blockbuster multimillion-dollar NFT transactions.
It is built on blockchain technology just like bitcoin, but instead of being viewed by its proponents as a store of value akin to gold, it is seen by investors such as Mark Cuban as having a higher utilization. That’s because one of its uses is as infrastructure for a decentralized internet, and people can build apps on the Ethereum network.
With a market cap of $481.8 billion — bigger than Coca-Cola, Snap Inc. and Ford Motor Co. combined — ethereum trails only bitcoin’s $1.1 trillion market cap in the crypto world.
An investment in ethereum at the beginning of the year would have seen strong growth over the ensuing months. A $1,000 ethereum purchase on Jan. 1 — at a price of $730.97 per coin — would be worth $5,710.85 at Monday morning’s price of $4,174.46, a gain of 471%, according to CNBC calculations.
That beats bitcoin’s 2021 growth. A $1,000 bitcoin purchase would be worth $1,984.13 at Wednesday’s price of $58,359.98.
It is important, however, to keep in mind that past performance is no guarantee of future returns. Experts have cautioned investors to put no more money into cryptocurrencies than they are comfortable losing. Read CNBC’s primer on ethereum here.
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