Analysts believe that although the price of Ethereum is rising in the short term, some factors indicate that the price is likely to fall within the current range. Experts say Ethereum may not see $ 5,000 any time soon if the current challenges are not addressed.
to the Report Ethereum is currently trading at $ 2,600 and has lost about 1% of its value in the last 24 hours. The digital currency, meanwhile, has managed to reach above $ 4,100 in recent months.
It is not possible to pinpoint the exact reason why Ethereum fell sharply from its all-time high, but the record low wage rises certainly affected investors’ expectations and were therefore involved in lowering the market price of digital currency number two. The sharp rise in fees not only showed how limited the current network is, but also prompted traders to try alternative networks such as China’s Binance Smart and Paligan’s second tier solutions.
As shown in the chart above, the average Ethereum transaction fee reached $ 45 after the Berlin Update in mid-April. Many users of the Ethereum community agreed that the Berlin update had little effect in the short term, but paved the way for the implementation of the London Hard Fork, which includes the 1559 improvement plan.
Now let’s look at the factors that, according to experts, prevent the further growth of Ethereum prices in the short term.
London Hard Fork Delay
London Hard Fork was part of the Ethereum roadmap for launching Ethereum 2.0 in 2022. According to the schedule, this update will be implemented on the main Ethereum network on August 4 (August 13). We were supposed to see the implementation of this fork in July, which was delayed.
The implementation of the London Hard Fork will affect the miners more than any other class. The 1559 improvement plan is a plan in which part of the fees paid in the network are burned; This means that miners’ incomes will also be affected by this upgrade. Improvement Plan 3553 is one of the other changes that will be implemented in the Ethereum network. This plan will gradually increase the complexity of the network and will be an incentive to migrate to the stock-proof consensus protocol.
Ethereum developers also do not have a brilliant track record of delivering upgrades. Ethereum prices are likely to decline if minor updates are implemented but significant changes that are debatable are delayed; This is because part of the current uptrend is due to speculation surrounding London Hardfork.
Exit of Ethereum Miners
In the current situation, the concerns are social rather than technical. As soon as it becomes clear that the miners’ income is gradually being cut off, we should expect the emergence of a competing network that wants to make the most of this issue.
Although most smart contract blockchains rely on a stock-proof consensus model, it is possible that some lesser-known projects to support Ethash-based mining will change their algorithm.
According to experts, it is possible that Bainance China and Solana, by adding another layer of security to their networks, will seek to absorb the hash power that remains unused after the miners leave the Ethereum network. This scenario is not very likely, but it can not be considered impossible.
Multi-chain decentralized applications
The longer it takes to fully launch Ethereum 2.0 and upgrade to decentralized applications to support sharding, the more incentives there will be to add multi-chain support to different projects.
Curve and Avi, which have the most locked value in the defy domain, have long added support for non-Ethereum blockchains to their networks.
Some experts and specialists ultimately claim that the phrase “Ethereum killer” is most appropriate for the Ethereum itself; This is because delays in launching scalable solutions will only result in decentralized applications turning to alternative solutions. On the other hand, the migration of stock-proofs increases the initiative of rival blockchains to compete with Ethereum.