Ethereum (ETH), the second largest cryptocurrency on the market, has seen a huge run up leading up to the launch of it's 'London' hard fork which went live just 5 days ago. For those who don't know what a hard fork is, A hard fork refers to a radical change to the protocol of a blockchain network that effectively results in two branches, one that follows the previous protocol and one that follows the new version. In a hard fork, holders of tokens in the original blockchain will be granted tokens in the new fork as well, but miners must choose which blockchain to continue verifying. So why has this affected Ethereum's price so drastically?
'London' has a major impact on how the ETH network operates, mainly with it's "gas fees". A gas fee is incurred on any transaction on the network and gets higher as demand on the network grows. 'London' seeks to stabilize these fees so that we don't see major spikes like we've had in the past. Another implication of 'London is in it's energy efficiency. In an interview with Bloomberg News, ETH founder, Vitalik Buterin has stated that EIP-1559 (Ethereum Improvement Proposal) could reduce emissions caused by the network by a staggering 99%!! This is fantastic news for any investor!
The most bullish sign we've seen for ETH is that after 'London' went live, the price didn't drop, which meant buying pressure was not only stable, but on the rise! Basically, people will generally "buy the rumour and sell the news" which means they will buy in when they hear about an event and then sell just before or as the event is taking place. This is very common in any market and is a great way of timing your buys and sells, but sometimes, such as what happened with ETH, a project will have so much belief in it's direction and will be performing so well that people will just constantly buy.
We've seen what happened with the price of Bitcoin over the years and the great majority of us are kicking ourselves for missing out, despite how cheap it was, could we be missing out on that same deal now with ETH? Maybe. This bull run cycle is expected to last until the end of this year or early 2022 so there's not a lot of time for gigantic growth in that time, but it's quite possible for ETH with current high predictions around $20,000 by the end of the cycle, this is with the predictions of $100,000+ for Bitcoin which is still possible. If ETH does reach anywhere near $20,000, I very much doubt it will come back down to it's current prices during the bear market because the biggest movements in crypto during the bear market will be in DeFi and NFTs, many of which are based on the ETH network. There is more on the horizon for ETH which we'll cover in future posts, but for now, it looks like a great investment and a great store of value as well.
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