After seeing a high of $2,400 last week, largest altcoin by market capitalization, Ethereum, leaped to the $2,600 range as a new week surfaces. Market observers have attributed the price rally to the ‘London’ Hard Fork upgrade, which is almost at hand. With the recent move, Ethereum has recorded a high not witnessed since Mid-June.
Currently, the price of Ethereum is still trading below the all-time high registered in May. The asset’s price along with other crypto assets crumbled following a market correction after the price rally, still in May. Notwithstanding, experts anticipate a massive upward movement, exceeding Bitcoin if the Hard Fork upgrade is successfully deployed.
Ethereum Deflationary Proposal Will Drive Price Spike
Essentially, among other improvement proposals for the network, one is set to turn Ethereum into a deflationary crypto asset. According to reports, the EIP-1559 update will address the issue of high transaction fees by introducing a network-fixed base transaction fee. The base fee determined by the network, will vary depending on the activity going on the blockchain.
In addition to the base fee, users who want to fast track their transactions are allowed to add a tip to incentivize miners. So alongside their normal block rewards, miners are rewarded with the tips while the base fee is burned, thereby reducing the amount of Ethereum in circulation. A reduction in ETH supply will instigate a price spike if demand increases as well. However, demand will not be a challenge since Ethereum is the second-largest cryptocurrency after Bitcoin.
Ethereum Market Sentiment Show Investors’ Greed
Meanwhile, the recent price movement also instigated a trajectory in the market sentiment. As of the last two months, investors and traders exhibited sentiments between ‘neutral’ and fear. Currently, as per Ethereum’s Fear and Greed Index, market sentiment on the asset has shifted to ‘greed.’ The index puts this at 58% greed.
Some investors have predicted that an ‘Ethereum Flippening’ is imminent in light of the upgrades scheduled for the blockchain. Notably, Ethereum will transition from PoW to PoS consensus by 2022. The momentum building for the transition leads investors to stake over 6 million ETH in deposit contracts.
Indeed, Ethereum is considered an ‘internet blockchain’ which has birthed numerous tokens via its ERC20 standard. As such, the prediction by analysts may not be far from the truth. Besides, Ethereum founder, Vitalik Buterin does not want the network to remain a blockchain for other tokens.
During the 4th Ethereum Community Conference, he announced that the network is due for scaling. In view of this, he suggested that decentralized finance could become decentralized governance with Ethereum, such that users’ accounts could become full-fledged profiles.
Bitcoin, on the other hand, lagged behind a little as Ethereum moved. However, it has broken the $40,500 resistance area and is now trading at $41,000. Regardless, technical indicators on the chart are bullish. The next resistance zone for Bitcoin to break out from is $47,800. Perhaps Bitcoin will cross its 65k May ATH in the new month.
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