'Scam' Concerns Drive an 8% Plunge In Ethereum This Weekend
Key Points
Macro conditions have continued to deteriorate this weekend, with more rhetoric from President Trump involving Greenland.
However, reports that a large-scale poisoning attack late last week may be masking some of Ethereum's user growth is concerning.
Let's dive into what this key bearish catalyst could mean for the world's second-largest digital asset moving forward.
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As the world's second-largest cryptocurrency, Ethereum's (CRYPTO: ETH) daily price moves are very meaningful to investors. Setting the tone for how many smart contract-enabled layer-1 networks will perform, Ethereum's intraday performance can bleed into plenty of other crypto assets, creating a situation where the market can turn decidedly red on an 8.1% decline from the close of equity markets on Friday to 12:00 p.m. Tuesday.
Of course, the saying is that crypto doesn't sleep, and neither do bad actors in this space. Several reports highlighting a potential issue under the hood within the Ethereum ecosystem this past weekend appears to be the most pertinent driver of the 8% decline in Ethereum investors are now debating.
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Let's dive into this move and what it means for Ethereum's investment quality moving forward.
Why is Ethereum plunging right now?
Source: Getty Images.
While most of the market appears to be growing concerned about the implications that new tariffs on European counterparts could have on capital flows into U.S. assets (and that's undoubtedly an essential piece of this story), reporting from independent researcher Andrey Sergeenkov outlined his view that the record transaction bump Ethereum saw as of Jan. 16 (with Ethereum seeing an all-time high of 2.8 million transactions, as well as a surge of new Ethernet addresses) was tied to a mass address poisoning attack.
In his view, and others', this mass poisoning attack (similar to a phishing scam) was made possible in part by Ethereum's recent Fusaka upgrade, which lowered gas fees and effectively made such attacks cheaper to facilitate.
Now, I think it's important to point out that some Ethereum bulls clearly aren't fazed by this reporting. Tom Lee and others are still buying, with Lee's BitMine adding $108 million of the second-largest digital asset to its treasury over the past week.
That said, I do think the Ethereum team will have some questions from its community to answer. At this point, today's 8% decline in Ethereum's token price appears to align with the potential pervasiveness of this issue, and I will certainly follow up with any updates as they come.
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Chris MacDonald has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum. The Motley Fool has a disclosure policy.
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