The price of Ethereum may be bullish in the short term, but there are a few considerations that might keep it stuck in its present range. Those who want to acquire Ethereum in the hopes of seeing it double in value quickly may want to hold on a little longer.
Since Ethereum co-founder, Vitalik Buterin appeared at the StartmeupHK Festival 2021, the price of Ether (ETH) has been on a downward trend. Several internal team disagreements led the Proof-of-Stake migration to be delayed, Vitalik said in a fireside chat event on May 27.
It’s hard to identify what caused Ether to plummet from its all-time high, but rising gas prices undoubtedly influenced investors’ expectations. It not only highlighted the network’s limitations, but also encouraged traders to try out other networks such as Binance Smart Chain (BSC) and Polygon’s layer-2 solution.
An in-depth look would show that the $45 average gas fee took place a whole month after the Berlin upgrade went live on April 15. The Ethereum community agreed that Berlin had less immediate impact but prepared the path for the long-awaited London hard fork’s EIP-1559 protocol on August 4th.
At the time of writing this report, Ethereum was trading at $2 ,599.24 up +6.71% in the past 24hrs, although this pace may be bullish, it may not be able to break past the current range. This brings us to one of the three variables that might have a short-term negative influence on Ether’s price.
Ethereum Miner exodus
This time, the major focus is social rather than technological. Once Ethereum miners realize that their money source will be gradually cut off, it will only be a matter of time until a rival network reaps the advantages.
Despite the fact that the majority of smart contract blockchains are built on the proof of stake consensus mechanism, certain lesser-known projects may alter their algorithm to allow Ethash mining.
Analysts should not rule out the potential that Binance Chain or Solana might leverage the increased hashing power created by an Ethereum miner exodus to construct an additional security layer. Despite the fact that this situation is unlikely, these moves would definitely exert downward pressure on the price of Ether.
Postponed hard fork’s release
The Ethereum London hard fork is a step toward the ultimate release of Ethereum 2 in 2022. The long-awaited update is set to arrive on August 4th, although it has already been postponed due to the prior timetable indicating late July.
The EIP-1159 proposal, which intends to burn a portion of the Ethereum blockchain’s fees, will have the greatest impact on miners. EIP-3554 also includes an incremental difficulty adjustment to encourage users to switch to the new Proof-of-Stake blockchain.
The track record of Ethereum developers in terms of delivery also does not inspire trust. If just a partial upgrade occurs, with the most contentious modifications postponed, Ether’s price may fall, as a chunk of the current rise is based on the hard fork’s hype.
The stronger the incentives for enabling multi-chain support, the longer it takes for Eth2 to be completely deployed and for dApps to modify their code to include parallel processing (shardin) capabilities.
Curve and AAVE, the two most popular DeFi protocols in terms of total value locked, now allow blockchains other than Ethereum. According to DeFi Llama statistics, Polygon now has $550 million in Curve contracts and AAVE has $1.8 billion.
Finally, the network itself would be the most likely Ethereum executioner, because delaying the scaling solution will drive users and dApps to other platforms. Simultaneously, the move to PoS allows for the strengthening of rival blockchains.