Ethereum blockchain’s Ether coin made history a few weeks back when it recorded a new all-time high on the back of a ferocious and relentless rally, which saw its price surge by 500 percent! However, those days are well behind us now, with the coin having plunged around 60 percent from that zenith before stabilizing around the current level. Such was the ferocity of its previous surge though, that the coin is still adhering to its 2021 uptrend.
As is evident from the chart above, Ethereum’s Ether coin continues to respect a crucial upward trendline that extends all the way back to the start of 2021. As long as the cryptocurrency does not close below this trendline, its uptrend will remain intact.
Of course, even from a fundamental perspective, the bullish narrative around the Ether coin remains intact. Remember, Bitcoin (BTC) plunged a few weeks back when Elon Musk used the leading cryptocurrency’s soaring energy consumption as a cudgel to reverse Tesla’s (NASDAQ:TSLA) endorsement of this novel payment medium. The shaky environment around Bitcoin was then further damaged when China clamped down hard on Bitcoin mining. Considering that the Asian giant was responsible for around 70 percent of Bitcoin’s hashpower just a few weeks back, the action not only caused a swoon in the price of the leading cryptocurrency but also caused a domino-effect plunge in the entire crypto sphere. However, through all this chaos, the strength around Ethereum’s fundamental narrative remained intact.
Let’s delve deeper. First, unlike Bitcoin, Ethereum 2.0 is set to tackle this issue of energy consumption head-on. Expected to be completely in place by the end of 2022, Ethereum 2.0 will incorporate two fundamental changes – sharding and staking. Under sharding, the Ethereum blockchain will be broken into distinct “shards”. Each shard would act as an independent blockchain, hosting its own smart contract blocks and transaction validators. The Ethereum 2.0 will also abandon Proof of Work (mining) in favor of a Proof of Stake (staking) mechanism, where instead of expending computational power – in the form of cryptographic calculations based on the hash rate – in order to forge consensus, the “miners” will simply stake or lock up a certain amount of Ether in master nodes. The transaction processing reward will then be distributed according to how much Ether an authenticator has staked. These two major changes will ramp up the Ethereum network’s processing power to around 100,000 transactions per second while also dramatically curbing its energy footprint.
Moreover, as Ethereum moves away from a Proof of Work (PoW) mechanism, it will naturally evade the concentration risk posed by the gigantic mining farms in China. Bear in mind that before the current crackdown, around 80 percent of the global mining capacity for both Bitcoin and Ethereum’s Ether coin was located in China, as per an estimate by Kent Garlinghouse, the CEO of Ripple Labs. Since this is not the first time that China has banned crypto mining, there is a hefty probability that this restriction may be short-lived. But, given Ethereum’s structural overhaul, the Ether coin will not remain beholden to the Chinese whims for long. Consequently, we believe that the recent plunge in Ether’s price has placed the cryptocurrency in the oversold territory.
On the more immediate timeframe, the Ethereum Improvement Proposal (EIP) 1559, set to go live in July with the London fork, continues to bolster the cryptocurrency’s bullish case. The EIP 1559 will now automate the calculation of a base transaction fee based on the network activity. Thereafter, the transaction fee, which is paid in Ether, will be destroyed. This will reduce the annual addition to Ether’s supply from the current 5 percent to just 1 to 2 percent. As per the rules of economics, when supply decreases, the price must increase if all else remains equal. Consequently, the EIP 1559 proposal is expected to provide a solid boost to Ether’s price.
The post Ethereum Blockchain’s Ether (ETH) Coin Is Still Adhering to Its 2021 Uptrend Despite Plunging 60 Percent From All-Time Highs by Rohail Saleem appeared first on Wccftech.
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