Ethereum’s gas costs increased as a result of Binance’s Proof-of-Reserves efforts
Activity on the network increased, but sentiment against Ethereum fell
There has been a huge spike in the past few days Ethereum [ETH] gas fees and gas consumed. This huge spike was caused by Binance moving large amounts of Ethereum for their Proof-of-Reserves efforts.
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Ethereum is propelling forward
As shown in the image below, Ethereum’s gas fees hit new highs, rising to 222 gwei. According to Wu Blockchain, this happened because:
“Binance consolidated funds from numerous deposit addresses to the Binance14 hot wallet in preparation for the next phase of POR scrutiny.”
This led to Binance generating 889 ETH gas fees and transferring over 437,000 ETH in an effort to get his Probbery of reserves and maintain the trust of its customers.
The Ethereum Gas fee once rose to 222 Gwei as binance consolidated funds from numerous deposit addresses to the Binance14 hot wallet in preparation for the next phase of POR monitoring. Binance has completed its BTC reserve and is starting an ETH check. https://t.co/Tan4AEjNMn pic.twitter.com/ylgUZ40pYa
— Wu Blockchain (@WuBlockchain) December 10, 2022
However, this spike in gas fees may have had a negative impact as high gas fees can affect retail investors and affect overall sentiment towards Ethereum.
The chart below shows that weighted sentiment towards Ethereum was negative. Despite this, great addresses kept piling up ETH.
As shown in the chart below, the percentage of Ethereum held by major addresses grew significantly after November 16. This support from major addresses could help sustain Ethereums grow.
Another positive for Ethereum would be the spike in network activity.
The number of active addresses on the Ethereum network has grown significantly over the past two weeks, reaching 33.3,000 addresses at the time of writing.
Combined with the aforementioned information, the number of addresses holding more than 0.01 ETH also hit a four-month high of 22,000 addresses, according to Glasnode.
View stats: https://t.co/XXb0u19ouH pic.twitter.com/H4UvSmgU16
— glassnode alerts (@glassnodealerts) December 10, 2022
Are investors ‘short-sighted’?
Despite the large addresses and high activity on Ethereum’s network, traders lacked confidence in Ethereum’s growth.
The image below showed that the funding rate for Ethereum fell. For example, there were more traders taking short positions against Ethereum and they were willing to pay long-term traders.
It has yet to be determined whether these short sellers can take profits.
At the moment of writing, ETH traded at $1,272.6. The price is up 0.62% in the last 24 hours.
This post Assessing the ‘why’ behind ETH’s gas price hike due to Binance
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