The flash crash on Tuesday saw Ether falling to $3,000 after hitting $4,030 just four days back. Momentarily wiping out all the progress made in the past month, Ether is currently above $3,400.

ETHBTC also went down to 0.0694 and is currently around 0.0737.

Before the crash, the amount of ETH open interest reached a new all-time high at $11.62 billion, growing by more than $3 billion in just 6 days of this month.

This rapid rise in ETH OI was likely aided by high amounts of leverage as the more the traders became bullish about ETH’s future, they began to take out leveraged long positions, anticipating that the price would continue to rise.

Before the crash, ETH perpetual futures funding rates ticked up to their highest levels since May. The fact that a growing amount of long contracts were willing to pay the funding rate in order to remain open shows a sign of positive market sentiment for the cryptocurrency.

With ETH seeing significantly more futures trading volume than spot trading volume, like most cryptos, it made the crypto asset susceptible to these types of crashes, as was also seen in May.

But while leverage flushes are painful in the short-term, they are typically healthy over the long-term as some of the riskier contracts are flushed out of the system and reset to healthier levels creating a more solid foundation for the next leg up.

Unlike the prices, underlying fundamentals remain unchanged. Ethereum added more than 6.2 million addresses holding 0.01-1 ETH since the start of 2021, showing that user adoption is growing at a rapid rate.

But one effect of this crash was high fees on the network, which, while negative for the users, is good for the network ever since EIP 1559 implementation earlier last month.

ETH gas prices spiked trading activity, and transfers picked up during the sell-off. NFT mania meanwhile continued with the launch of a new project called “the Sevens.”

5 figs gas pic.twitter.com/7tz2A3lQC6

— mhonkasalo (@mhonkasalo) September 7, 2021

These high fees translated into negative ETH issuance during many blocks of Tuesday. This was the second deflationary day for ETH after Sept. 2nd when $54 mln of ETH was burned. So far, overall, 240,135 ETH has been burned worth $816 million.

The average transaction fee had surged past $63, near the May 19 all-time high of $70.83, according to Blockchair. As of writing, it is $38.47, while the cheaper and faster alternative Solana currently costs 0.000005 SOL per transaction worth $0.00080 at the current SOL price of $155.21. SOL 1.88% Solana / USD SOLUSD $ 165.13
$3.10 1.88% Volume 12.47 b Change $3.10 Open $165.13 Circulating 292.84 m Market Cap 48.36 b baseUrl = "https://widgets.cryptocompare.com/"; var scripts = document.getElementsByTagName("script"); var embedder = scripts[scripts.length - 1]; var cccTheme = {"Chart": {"fillColor": "rgba(248,155,35,0.2)", "borderColor": "#F89B23"}}; (function () { var appName = encodeURIComponent(window.location.hostname); if (appName == "") { appName = "local"; } var s = document.createElement("script"); s.type = "text/javascript"; s.async = true; var theUrl = baseUrl + 'serve/v1/coin/chart?fsym=SOL&tsym=USD'; s.src = theUrl + (theUrl.indexOf("?") >= 0 ? "&" : "?") + "app=" + appName; embedder.parentNode.appendChild(s); })(); 51 min Ether Fees Skyrocket During Flash Crash Making it Deflationary, SOL Provides an Opportunity to Those Who Missed ETH 1 d Bitcoin (BTC) Finally Records Inflows After 8 Weeks, Solana (SOL) Remains the Favorite Altcoin 2 d FTX Launches Cross-Chain NFT Marketplace for Both US and Global Users

Ethereum competitor Solana also showed its resilience during this flash crash, yet again. Tuesday, SOL made a new all-time high at $195.5, up from $1.52 on January 1st. The same day, the price fell more than 31% to $134.4, only to surge to a new ATH at $200 on Coinbase.

Solana wants bears to literally go extinct please spread awareness due to Solana summer the bear population is dwindling fast save the grizzlies https://t.co/UpYJmZi6jW

— Matthew Graham (@mattysino) September 7, 2021

Meanwhile, British banking giant Standard Chartered in its first report on crypto on Tuesday, valued Ether in a $26,000-$35,000 range in the long term adding, for Ether to get there, Bitcoin needs to first trade at $175,000. BTC -1.40% Bitcoin / USD BTCUSD $ 46,236.55
-$647.31 -1.40% Volume 55.2 b Change -$647.31 Open $46,236.55 Circulating 18.81 m Market Cap 869.72 b baseUrl = "https://widgets.cryptocompare.com/"; var scripts = document.getElementsByTagName("script"); var embedder = scripts[scripts.length - 1]; var cccTheme = {"Chart": {"fillColor": "rgba(248,155,35,0.2)", "borderColor": "#F89B23"}}; (function () { var appName = encodeURIComponent(window.location.hostname); if (appName == "") { appName = "local"; } var s = document.createElement("script"); s.type = "text/javascript"; s.async = true; var theUrl = baseUrl + 'serve/v1/coin/chart?fsym=BTC&tsym=USD'; s.src = theUrl + (theUrl.indexOf("?") >= 0 ? "&" : "?") + "app=" + appName; embedder.parentNode.appendChild(s); })(); 51 min Ether Fees Skyrocket During Flash Crash Making it Deflationary, SOL Provides an Opportunity to Those Who Missed ETH 1 h Historic Day for Bitcoin: 1.2 Million El Salvadorian's to Benefit From Crypto Adoption 2 h Cleansing or Reversal? Over-Leveraged Apes Get Punished and Funding Resets as OI Drops Over 21%

While Ether’s price prediction shows it having “greater” reward potential than Bitcoin, it also has “higher” risk in terms of “relative complexity” and “uncertainty” around its development, the report added.

On the other hand, according to John Street Capital, a lot of parallels have been drawn between SOL on Tuesday when it hit new ATHs and when ETH crossed $100.

“ETH found PMF w/ ICOs & for those who “missed” BTC. SOL is finding PMF w/ DeFi NFT's & for those that missed ETH or remain ideologically flexible,” it said while noting that SOL is a much smaller percentage of Bitcoin and of the total market cap than Ether was while having “greater utility” than the second-largest cryptocurrency had in Q2 of 2017.

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