Ethereum, the world’s second largest cryptocurrency by a big margin is showing signs of recovery ahead of its big update called the London Hard Fork aka EIP 1559. The price index itself has risen above $2k to go as high as $2.2k earlier today. Is this a sign of a big recovery rally in the coming days?
Ethereum’s price index tanked heavily after reaching record highs of around $4.35k last month. But, after reaching these new highs ,the index crashed spectacularly and has now largely traded below $2k for several weeks. The premier programmable digital currency was expected to go even higher than its record level and even predicted at around $10k max level but several factors contributed to its downfall. They included high transaction fees, slow and ineffective upgradation process and the collapse of the general cryptocurrency market itself.
Ethereum also fell much more heavily than Bitcoin and several other cryptocurrencies, demotivating buyers and resulting in a big slump in the index. The transaction fees also hit near all-time highs and started piling up resulting in even more concerns. However now, after reaching a multi-month low of around $1.7k, the index is looking to recover once again.
The London Hard Fork
The latest update to the network is called the London Hard Fork. The new move was announced by the Ethereum core team to address some of the key lingering issues being faced by the network.
According to one independent analyst on Twitter:
#Ethereum $ETH targets $2,045 first
Ethereum price is surfing on the recovery wave.
After the dip, ETH is in consolidation and looks ready for the break higher
With the only pivot in the way, the triple top around $2,045 is set as the next price target. pic.twitter.com/a0zV6E5at4
— RESEARCH 24/7 (@smallcappick) June 28, 2021
At press time, the index has already gone above $2.1k, validating this earlier prediction. Now the next target is set at around $2.5k but it may not be achieved instantly. The London fork itself is quite controversial within the cryptocurrency’s ecosystem. It will transition the network from a Proof-of-Work (PoW) hybrid system to an almost completely Proof-of-Stake (PoS) system.
The move however is not going as smoothly as Ethereum miners are close to boycotting the system because of their diminished status within the ecosystem because of the planned upgrade. The new idea of capping transaction fees is also an evolving problem as it will disturb the free market nature of the transaction economics and may push many stakeholders out of the system and on to other networks.
Overall, the London Hard Fork is a big challenge for the Ethereum network. We may see a price appreciation in buildup to it but long-term price appreciation will depend on how successful is.