Ethereum – The calm before the price storm
- A tipping point in the crypto market is imminent as the demand for block space allocation grows.
- The supply of Ethereum is shrinking with the network, which has burned a total of 109,000 tokens since implementing the EIP-1559
- Ethereum’s price level above the $ 3,200 mark is a bullish indicator of further price hikes.
The importance of ICOs, DeFi and NFTs has emphasized that Ethereum retains the supremacy of the smart contract platform while showing an urgent need to improve its network efficiency. Ethereum has a first mover advantage and an on-chain data and community consensus catalog Ethereum as a catalyzing network to make blockchain and off-chain integration achievable. The EIP-1559 upgrade is thus a factor that is fueling investor interest.
Upgrades for the better
The initial hypothesis of turning Ethereum into a proof-of-stake network met with criticism from miners who viewed the development as an injustice in their participation. However, Vitalik Buterin underscored the value Ethereum’s deflationary stance will have for the future of Ethereum and encouraged miners to continue participating in the network.
The beacon chain, or the ETH 2.0 dashboard, shows that a total of 7.2 million ETH are currently connected to the network. In addition, the network has burned 110,000 ETH since EIP-1559 was published, changing ETH’s position in the market as supply and demand change.
EIP-1559 is not the only update that has been forced onto the network by developers as EIP-3554 will introduce further changes to the network, irreversibly increasing the mining difficulty. While the latter upgrade was delayed by six months, it raised concerns about “bribery of miners”. AllianceBlock’s CEO argued that the delay was for the miners to “accept EIP-1559 to continue building Ethereum 2.0”.
Bullish on-chain data
Ethereum has posted 355% gains since the start of the year, which has led investors to rethink their investment decisions. Grayscale and other mutual funds opened Ethereum and other ERC20 token trust funds, increasing investor exposure to the currency, particularly in the US, where crypto trading volume and adoption are attributed to institutional capital.
According to Bloomberg, Ethereum contracts trade at a premium of 8.37% compared to 6.58% in. Additionally, on-chain data shows that Ethereum outperformed Bitcoin in terms of total trading volume. Coin Metrics’ data suggests that $ 185 billion was traded with ETH in August alone, compared to $ 180 billion in BTC.
A delay in EIP 3554 incentives resulted in network activity with gas activity increasing 9% daily. As a result, gas prices hit a new three-month high, with average gas prices reporting a value of 102.28 on August 25, showing that block space requirements on the Ethereum network are increasing.
On the downside
- The Ethereum network was forced to split after 50% of customers were hit by a bug.
- The value of an ETH is still speculative because it depends on how much others appreciate it.
The $ 100,000 flippening
Activity on the Ethereum network has increased, with NFT transactions on OpenSea outperforming those on the DeFi platform Uniswap, as Anton Bukov’s tweet shows a striking difference in trading volume. Hence, with Ethereum at the forefront of every new blockchain trend, it can be argued that the network has intrinsic value as it promotes a new form of off-chain connectivity.
Crypto Kuant’s Ki-Young Ju highlighted in a tweet that Ethereum is “closer to ATH than BTC” due to the same interactions that helped Bitcoin hit new highs: scarcity and demand. Similar arguments prevail on social media, further suggesting the possibility that flippening may occur much earlier than expected.
While other smart contract platforms are right to question Ethereum’s network hegemony, it’s worth noting that Ethereum’s first mover benefits are complemented by a higher LTV and use cases. While Solana could pose a threat to Ethereum, platforms like their smart contract functionality have yet to integrate.
Why should you care?
Market valuations should be reflected in the use case that the network adds to the overall blockchain ecosystem. Bitcoin has become a store of value while Ethereum is becoming a used platform for securing digital transactions. With technology moving at a rapid pace, it is unlikely that this will be the ranking in 10 or 20 years.
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