Markets are overreacting, fundamentals for BTC, ETH and other crypto are still the same

The landslide we are seeing on the market still seems to be far from over with Bitcoin possible dropping to levels way below $4k. The established cause for this is unknown with couple of relatively plausible hypothesis circling around: BCH egomaniac Craig Wright and Jihan Wu selling BTC to fund their hash war on BCH forks to bankers entering behind the scenes and crashing the price to shake out the weak hands and accumulate as much digital gold as possible.

Whatever the reason, this price drift is plain and simple a huge overreaction of the markets coupled with panic selling and automatic shorts being caught and executed.

Bitcoin fundamentals haven’t changed, just the contrary, they are stronger than ever. Infrastructure still in place and growing nicely.

Just look at the Lightning Network which is making records as its capacity increases by nearly 200% in the last 4 months, touching $2 Million BTC in capacity with over 15,000 open channels. (333.50 BTC). Most of this growth has come in the later half of 2018, as the average age of each node is just 137 days old. Heralded as a potential solution to Bitcoin’s scalability problem, the Lightning Network operates as a secondary layer on top of Bitcoin’s base network.

As for Ethereum, at its peak Ethereum represented an exceedingly high gas price with very little actual transactions. During the ICO bubble, ERC-20 compliant contracts flooded the market. As ERC-20 utility tokens does not represent any actual value, Ethereum could have been considered overvalued at this time.

Now, with the ICO market having wiped out most of the overpricing from Ethereum, Ethereum may be considered undervalued. Ethereum is a very powerful tool, that is going virtually unnoticed due to the prevalence of ICOs.

Ethereum blockchain has been a victim of its own success – tons of project launching their tokens on top of ETH blockchain proved to be too much for its current design and output. At the peak of activity, Ethereum was clogged to death with trivial games like Cryptokitties.

under_second_paragraph 127The solutions for the scalability issue piled up almost on weekly basis. Two most prominent solutions came from the very top of the Ethereum hierarchy – Vitalik Buterin himself. One proposal is the so called Casper – proof of stake consensus mechanism and the other is sharding – creation of thousands of sidechains that would easily scale to millions of transactions per second, leaving even the contemporary benchmark Visa in the dust.

The most recent idea bidding to solve the arduous scaling problem for Ethereum is the Ethereum 2.0 – a completely new blockchain that will have both Casper and Sharding implemented on it.

Let’s have a brief look at what is this latest product from the Ethereum’s idea kitchen all about.

In the presentation by Ben Edgington, Ethereum 2.0 is mentioned as the ultimate solution which needs to be designed with three set of mandatory and optional features in mind: what must it have, what should it have and what could it have.

Must haves are on chain scalability, thousand times bigger capacity than the current one. The other indispensible feature that needs to be present is proof of stake consensus. Both of these conditions are means to the goal which is: decentralization, availability, security, usabiltiy, continuity.

The should haves are less discussed properties like: quantum resistance, account abstraction, delayed state execution and atomic cross hard transactions.

The could haves are rent storage abilities and Casper CBC consensus.

New Ethereum 2.0 architecture is a much more complex structure than the “scrappy attempt” called Ethereum. It is a multi-layered system with an anchor PoW chain on top of which will be running the coordinating chains called Beacon chains which are foundation for the Shards – sidechains that will run the Ethreum Virtual Machine – EVM.

There is a whole bevy of teams that are taking part in building this new complex Ethereum 2.0. Some of them are familiar names like Status, Prysm, Pegasys, Lodestar, Harmony, Parity etc.

However, the market overreacted last year as well as the price unduly rose to unbelievable heights of $20,000 per bitcoin and $1400 for ethereum. So this is the market’s popping the bubble with a bear needle. This is what a healthy market does, cleaning itself up from the pests and shitcoins.

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CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of

Rene Peters

Rene Peters

Rene Peters is editor-in-chief of CaptainAltcoin and is responsible for editorial planning and business development. After his training as an accountant, he studied diplomacy and economics and held various positions in one of the management consultancies and in couple of digital marketing agencies. He is particularly interested in the long-term implications of blockchain technology for politics, society and the economy.

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