We have all been following the crypto market very closely in the past few months, trying to wait for the bottom to hit. Back in late June - early July, we saw Ethereum touch triple digits, so why has it bounced back to over $1575 USD over the weekend?
The network announced on the weekend a tentative launch date (19 Sept) for their upcoming software update, The Merge, which will see Ethereum 2.0 use a proof-of-stake consensus mechanism, shifting from proof-of-work. Ethereum 2.0 will result in a 90% reduction of Ethereum tokens issued yearly, cutting its total power usage by over 99%.
As such, the Ethereum price jump can be attributed to the:
New model being released soon
Reduction in its environmental impact
Improvement in its transaction speed
However, playing devil's advocate, Martin Hiesboeck, head of blockchain and crypto research at Uphold, commented that "the sudden jump is mostly motivated by hype and perhaps a lack of understanding of what The Merge will actually do”.
So what next?
CoinDesk's The Hash Podcast host WendyO predicts that Ethereum will only break $1700 if it manages to float above $1294 throughout the next few weeks.
The co-founder of crypto fund of funds AltAlpha Digital, Marc Bernegger, expects "more reallocations ... into Ethereum", as "most traditional investors are focusing on digital assets".
Provided Ethereum 2.0 is successful, Coinpedia predicts a price of $12,962.33 this year.
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