Ethereum’s London update was a success (also for ETH prices). What are the scenarios that will open up now?
Ethereum’s London hard fork ended in the best of ways. We are not referring only to the fact of the success of the update operation but also to what was the reaction on ETHUSD in the aftermath of the hard fork. Contrary to what were (some) forecasts on the eve, after the operation there was no collapse but on the contrary the price of Ethereum continued its growth beyond 3000 dollars, also generating a drag effect on Bitcoin (we talked about it here ).
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The upward trend of Ethereum is continuing today with the cryptocurrency price which remains firmly above $ 3100 as can also be seen from the graph below.
At this point, investors’ attention is already on the future. The question circulating in crypto-traders’ environments is what can happen in the medium term. In other words, what impact will the London hard fork have on the price of Ethereum? Will there be a consolidation of the uptrend (perhaps with a projection towards the highs) or will a retracement below 3000 dollars be more likely?
Given that, in both cases, it is still possible to operate through online trading (there are brokers such as eToro – here the official website – that allow you to invest in cryptocurrencies both upwards and downwards), let’s try to understand what effect the 5 updates implemented in the ETH hard fork could have.
Hard Fork London of Ethereum: what will be the changes
Before talking about prices (by the way, here you can read the Ethereum 2021 forecasts) it is necessary to analyze from a technical point of view the transformation that has been brought about by the update. To do this we can refer to Orlando Merone’s analysis of Bitpanda. According to the analyst, the EIP-1559 update will have a significant role in the dynamics of the price of Ethereum as it will determine a deflationary effect on all occasions in which a transaction must be carried out. The new functionality will determine a mechanism for limiting the overall availability of ETH through the automatic elimination of a variable quantity each time a transaction is executed.
The hard fork will change the issuance schedule with a part of the basic fees that will be burned by generating a gradual reduction in the mass of Ether and thus making Ethereum a digital currency with deflationary characteristics. As demand will therefore exceed supply, a rise in the value of Ethereum. This dynamic can be exploited to invest upwards on the price of Ethereum. To operate it is essential to choose brokers that offer advanced tools such as eToro and its Copy Trading thanks to which it is possible to copy from the best traders.
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Ethereum price after London hard fork: what effects
In light of the analysis on the new mechanisms thathard fork London will go to determine, Merone has provided some forecasts on the possible trend in the price of Ethereum. Ethereum’s current market cap stands at € 320 billion and the cryptocurrency ranks second in terms of market capitalization. The value of Ethereum rests on the role of the asset in powering transactions within DApps (decentralized applications). The principle is this: the greater the number of existing DApps, the more transactions are carried out and therefore the greater margin of growth the price of ETH has.
The EIP-1559 update could therefore have a positive effect on the price of Ethereum as it will gradually reduce the circulating supply of Ether.
If you add to this also another driver provided later that is the programmed one transition from the Proof of Work consensus protocol to the Proof of Stake one, it is deduced that the deflationary trend for the Ethereum offer can only consolidate with a consequent positive impact on prices. But what is this if not a further motivation in support of bullish strategies on ETH to be implemented through CFDs?
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Merone’s confidence in Ethereum’s prospects goes so far as not to exclude that ETH may also offer higher returns than those of Bitcoin in the coming years. Not a new view since in the past we have already dealt with the possibility that Ethereum could overtake Bitcoin.
According to the Bitpanda analyst, a progressive decoupling of Ethereum from Bitcoin has been underway for some time. It is no mystery that the interdependence relationship between BTC and ETH is down. In general, however, it is the whole cryptocurrency sector that has moved positively in the last few weeks, so much so that the Crypto Fear & Greed index has risen from fear to an intermediate area (50/100) up to 75/100 points in the last few days.
Summing up, the effect of the London hard fork on Ethereum could even be very similar to that generated at the time by the Bitcoin halving of May 2020. That this too may be the signal of an ETH growth even capable of undermining the Bitcoin?
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