Demand For Network Space Drive Ethereum Higher
By Bogdan Giulvezan
Ethereum’s Getting Expensive to Move – Fees Spike as Uniswap Launches UNI Token
Almost 1 million US Dollars in transaction fees were spent in less than one hour for moving ERC-20 tokens. It’s a new high for this type of fee, and it’s all due to the launch of Uniswap’s UNI token.
UNI seems to be the hottest thing in DeFi right now, although it is merely one day old, with Uniswap announcing its launch Thursday, around 00:30 UTC. The total UNI supply is 1 billion coins, which will be released gradually over the next 4 years. If you’re wondering what all this has to do with Ethereum miner fees, allow me to explain: Uniswap’s protocol is built on the Ethereum network, thus all transactions that are sent to the UNI smart contract will have to pay gas.
On top of that and according to a Uniswap blog post, “With 15 % of tokens already available to be claimed by historical users and liquidity providers, the governance treasury will retain 43% [430,000,000 UNI] of UNI supply to distribute on an ongoing basis through contributor grants, community initiatives, liquidity mining, and other programs.”
All of this led to a 30% increase in the number of pending transactions per minute on Ethereum, a spike in the median transaction fee from $2.13 to $5.37 (152%), and an increase in gas price. Reports show that gas price went as high as 700 gwei but under normal circumstances, it runs around 490, with 540 gwei being considered high. But how will all of this affect Ethereum itself? Let’s see what happened so far and try to analyze its next move.
The Technical Scene
According to CoinMarketCap, Ethereum’s price increased by 2.50% during the last 24 hours, currently trading at 386 US Dollars. As we can see from the Daily chart below, it dropped significantly after stopping just below the major psychological resistance at $500 and broke a support zone located between $380 and $365.
However, the support at $320 proved very strong and stopped the furious drop, pushing the price higher. At the moment, it’s not clear if the bulls can generate enough impulse to take ETH above the previous support now turned resistance ($380 zone) but if that happens, we will likely see a test of $440 zone (last peak and resistance level before $490).
On the other hand, if the bulls run out of steam and fail to break the current resistance zone, we should prepare for another drop towards the $320 area. The technical indicators favor a move up, with the Stochastic showing bullish momentum and the MACD crossing upwards but we must keep in mind that the last major move was bearish (the drop from $490 to $320) so we shouldn’t rule out a continuation of said move.
