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Technical analysis

Ethereum Price Plunges After Constantinople Hard Fork Was Postponed

Sanmi Adeagbo | Jan. 16, 2019
Ethereum Price Plunges After Constantinople Hard Fork Was Postponed

Ethereum core developers have called for the delay of the constantinople hard fork after they discovered a critical bug in one of their planned changes.

January 16, 2019 | AtoZ Markets - Ethereum price plunged by 11% to hit $120 after the long-awaited constantinople update was delayed by Ethereum developers. This happened just hours before the hard fork was planned to go live on the Ethereum network. The decision to postpone was born out of potential vulnerability discovered in one of the security upgrades. According to a published statement, the potential vulnerability has a root in EIP-1283, which introduces a cheaper gas cost for SSTORE operations. The statement reads:

Because the risk is non-zero and the amount of time required to determine the risk with confidence is longer than the amount of time available before the planned constantinople upgrade, a decision is reached to postpone the fork out of an abundance of caution.

Researchers believe that EIP-1283 might have been activated and already be running on the Ethereum network which might in turn become vulnerable to reentrancy attacks. Reentrancy attacks allow the attacker to ''reenter' the same function multiple times without updating the user about the state of affairs. This means that an attacker could be withdrawing funds repeatedly and forever. Chainsecurity has published a more thorough details about the vulnerability of this attack

Exchanges and Miners Must Upgrade

After this new development, cryptocurrency exchanges and miners that use Ethereum software client must either upgrade to emergency version or downgrade to the version before the hard fork. This is necessary since the constatinople fork software is not compatible with previous version. Failure to upgrade will cause a disconnection from the Ethereum network. Meanwhile, wallets remain secure and traders that do not run full node need not to take any action. Traders and users are advised to beware of scammers who might want to take advantage of the current situation. No new date for the hard fork has been announced yet, at the time of this report.

Ethereum Price Dropped 11%

Prior to this event, Ethereum was in a good mood. It quickly gained $20 from $114. After the delay statement, it quickly dropped to $120 as the chart below shows. Currently, Ethereum exchanges for $123.

From the technical chart above, the rally from 82 low completed an impulse wave upside to 167 gaining about 102% in the process. A 3-wave bearish correction quickly followed to $114 resulting in a 30% slump. The current dip could continue to $90-100 before the next upsurge in the region of $200 or more. However, it the current dip goes deeper, below $82 low, price will most likely continue to $20.

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