Undoubtedly, the biggest event that is scheduled to take place this week is that of the upcoming London hard fork for Ethereum (ETH), with either the 4th or 5th of August 2021 expected to be the date when the new update arrives, according to various sources. Through this, Ethereum’s blockchain shall be undergoing a drastic transformation, one that investors are hopeful will finally do away with the high gas and transaction fees, which will make Ethereum a bit more accessible for everyone.
In simple words, a hard fork may be defined as a kind of ‘split’ regarding any software’s underlying base code. This ‘split’ or ‘fork’ causes the software to adopt a different path as opposed to before, which causes drastic changes to how the software works and what it means for anyone who uses it. Hard forks are commonplace in the world of blockchain technologies and cryptocurrencies. In Ethereum’s case, the blockchain’s nodes have the chance to vote regarding whether any such fork would be approved or not.
Pricing pressure
In addition to the aforementioned reduction of the fees, the EIP-1559 upgrade shall also be restricting the Ether token supply, which may generate pricing pressure. This pressure has caused a number of researchers and analysts to expect a significant increase as far as ETH’s price may be concerned, with the estimations ranging from $5K to $10K. The current price is $2,541.
At the moment, everything seems to be going according to plan, and operations are running smoothly. Options data had indicated that investors expect pricing gains to take place once more as soon as this upcoming fall season. Moreover, pricing data had shown that a substantial amount of support through open interest has been forming for those options calls that have a $5K strike price as well as a contract expiration of the 31st of December. Lastly, support was observed to have been increasing near the $8K to $10K mark too.
The hard fork must be successful
Ethereum had increased in popularity and usage so much that its blockchain has now become strained. The recent ‘Stoner Cats’ NFTs debacle where more than 300 ETH had been lost largely due to network congestion is a perfect example of this. Because of this strain, the gas fees had increased astronomically, and at certain times had cost even more than that of a traditional wire transfer.
After the hard fork, there will be an increase in price predictability, and the gas fees will be reduced but not removed completely. Additionally, some of the fees shall be destroyed or burnt, which will result in extra scarcity being created in the network (that will also cause upward pressure regarding the price).
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