Recent weeks have been filled with a lot of buzz about ethereum and an increased interest in ethereum by crypto-traders, investors, and speculators alike. This buzz was generated when the crypto giant doubled in price in less than a month, this resurgence comes amidst a market-wide bullish run that saw gains in value for most cryptocurrency including Bitcoin and Litecoin.
This was unexpected as ethereum’s growth had been a slow and steady movement since it’s a correction in 2018. This crypto giant did not stop at just doubling, the bullish movement pushed the price of ethereum to a new peak, with ethereum trading at a price value of as high as $1,435 on crypto exchange Bityard, this price surpasses its previous all-time high. Although this price has taken a slight correction, as ethereum now trades at a price value of $1,352 on crypto exchange Bityard, there is still a large interest in the coin.
ETH currently trading at $1352.45 on Bityard
The question now on everybody’s mind is: “will the price of ethereum still rise, or are we expecting a retracement as it did back in 2017″.
To answer this question, we need to first analyze the factors that propelled this gain in value
The onset of the coronavirus and the ensuing lockdown was a critical drive to the increase in the price of ethereum. The shock of the pandemic, compelled businesses and institutions to develop and improve their digital infrastructure which included tech-enabled and remote financial services, leading to an appreciation in the value of cryptocurrency as they filled in this need. As the global economy transitions more and more into a digital and decentralized economy, the price of ethereum is still expected to rise further.
Another factor responsible for ethereum’s price increase is the resurgence of the decentralized finance (DeFi) industry, which is based on the idea that cryptocurrency technology can create an open alternative to traditional financial instruments such as savings, trading, loans, and more. The exponential growth of the DeFi ecosystem of which ethereum is part is still set to attract more users. This is expected to invariably lead to a further increase in the value of ethereum.
Now we look at upcoming projects on ethereum, that are expected to drive its price higher
The launch of ethereum 2.0 phase 1 scheduled to take place this year 2021
Ethereum is in the process of transitioning from a proof of work blockchain to one that operates on the proof of stake mechanism this will also incorporate an upgrade to Ethereum 2.0. There are 4 phases in the upgrade to Ethereum 2.0: phase 0, phase 1, phase 1.5, and phase 2.
Phase 0 went live on the 1st of December 2020. Phase 1, the next phase is expected to be completed this year 2021. This phase (phase 1) involves the launch of 64 shard chains in the network which will greatly reduce the time taken to confirm transactions and improve the overall capability of the network, this is projected to further drive the price of ethereum higher.
Ether Burning and Predictable fees
Actions carried out on ethereum based decentralized applications or protocols are viewed as transactions and miners require fees from users to process these transactions. An auction-style system presently determines the transaction fees, this causes a lot of problems as users who attach the highest fees get their transactions processed first, leading to unpredictably high fees when there is an increase in trading activity and therefore network congestion
EIP 1559 is an Ethereum improvement proposal that aims to change the present auction-style system of transaction fees and manage ethereums supply. It proposes a base cost, determined using algorithms. This base cost called the BASEFEE is to be equal across the platform and will rise and fall uniformly based on the network activity, there is however an option to tip miners for faster transactions
The proposed EIP 1559 also comes with another unique feature: Ether burning
Burning means removing tokens from existence, EIP 1559 plans to burn the BASE FEE, so that majority of ether used to process transactions is destroyed instead of being given to network validators.
This expected to cause an increase in the price of ethereum with time.
In conclusion, based on market factors, anticipated upgrades to the ethereum network and technical analysis using indicators, such as the Fibonacci extension, short-, medium-, and long-term price targets can be calculated, and prices of $1,700 $2,200 $3,700 $5,100 and &5,700 have been projected as possible new price records.
One can confidently assume that the price of ethereum has no other place to go than up.
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