While experts are optimistic about the long-term altcoin market, a famous executive predicts an unexpected drop with giant projects destroyed.
Former Arcane analyst reports that the altcoin market is in danger for these 3 reasons
Most experts are optimistic about Ethereum (ETH), which has recently approached the $2,000 price level again. However, the Ex-Arcane research team shared three aspects of the “collapse” that will directly impact the leading altcoin project.
Anders Helseth, vice president and head of research at crypto analytics firm K33 (formerly Arcane Research), forecasts an unexpected drop for Ethereum (ETH) as a technology and ETH as an altcoin.
https://twitter.com/andershelseth/status/1636388586227666945
What are the risks of cross chains and bridges for Ethereum (ETH)?
According to Anders Helseth’s March 16 tweets, Ethereum’s (ETH) dominance in the smart contract segment could be his final trump card. Due to problems with removing liquidity from Ethereum, users often give up on switching to other networks. Ethereum had exorbitant gas fees for smart contract transactions at some point in the 2021 bull. According to Helseth, these exorbitant prices are forcing a large user base to stay on the ETH network.
On the other hand, according to most Ethereum users, the modern bridge ecosystem is too expensive to use, too “insecure” and too difficult to use. People continue to use Ethereum (ETH) because they have no other choice. Moving liquidity through bridges is still very risky and expensive.
As a result, Ethereum shows a long-term bearish trend due to the disadvantages mentioned above and new competitors emerging. Once the Web3 segment becomes truly Ethereum-independent (cross-chain value transfer becomes easier and more affordable), money will go to other blockchains.
Layer-2 solutions can destroy L1s like Ethereum
Even if such a prediction is wrong, Ethereum (ETH) could lose its target audience due to the indifference of modern use cases associated with the need to store ETH (“lock-ins”). Finally, the evolution of L2s threatens to knock Ethereum down from its market leader position. According to Helseth, in such a situation, it can bring radical solutions to many problems in the blockchain space:
Scaling solutions make the blockchain space virtually endless. Scaling solutions reduce the need to pay for transactions. So even if everything scales on Ethereum, transaction fees would be so cheap that Ether would be of little value.
3. Scaling solutions make blockspace virtually infinite
Scaling solutions reduce the ability to capture the willingness to pay for transactions. So, even if everything is scaled on Ethereum, transaction fees would be so cheap that Ether captures little value
— Anders Helseth (@andershelseth) March 16, 2023
Bridge security, which is currently one of the biggest barriers to Ethereum, has not yet been fully secured. Most of the funds stolen in hacks in 2022-2023 were lost due to bridge design flaws. As Kriptokoin.com, we have reported numerous hacking attempts targeting Ethereum bridges since last year.
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