CryptoQuant’s Author MAC.D Explains Drop In ETH Price
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Leading on-chain data analytics provider CryptoQuant’s author MAC.D diagnosed the fall of Ethereum’s (ETH) price. The cause and effect relation is intricately explained in an article published by CryptoQuant on Twitter.
Excessive $ETH transaction failures, Markets overheated
“When the number of transactions increases, the network overheats and competes to pay higher gas fees to complete transactions.”
— CryptoQuant.com (@cryptoquant_com) May 4, 2023
In the article, MAC.D pointed out that the recent Ethereum Shanghai upgrade and the activation of the network led to the occurrence of excessive transactions. “When the number of transactions increases, the network overheats,” he stated.
MAC.D further observed that if the gas limit is set too low as the network overheats, the transaction may not be completed and more Ethereum transactions may fail. Hence, in order to prevent damage to gas costs, he explained that the users, “compete to pay higher gas fees to complete transactions.”
Following that, MAC.D offered an insight into Ethereum’s average gas limit. He said, “Ethereum average gas limit allows users to specify a maximum gas limit to prevent transaction fees from being too high.” He remarked that ETH’s average gas limit has recently increased. As per ETH’s official page, ETH currently has an average gas limit of 21,000 units of gas.
The author indicated the fall of ETH’s price by taking an anecdote from the past:
When ETH transaction failures rise above 200,000, it shows a market overheating and has often seen a price correction.
Furthermore, MAC. D stated that even though there seemed to be an adjustment tax due to overheating, it may be a short-term phenomenon. Subsequently, looking at the BTC MVRV cycle indicator, MAC.D denoted that ETH is currently at a low. He suggested, “there is still room for further upside.” He also advises that it would be a good idea to use the ‘corrective market’ to ‘accumulate’ ETH.
According to CoinMarketCap, ETH is currently valued at $1,900.12 with a surge of 1.80% in the last 24-hours.