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ETH Price Roars towards $3K as Radical EIP-1559 Upgrade Goes Live

The ETH price logged an impressive rebound towards $3K on August 5 after the much-awaited EIP-1559 software upgrade to the Ethereum blockchain debuted. The network adjustment, which is part of a broader move toward ETH 2.0, swiftly countered the downtrend seen in recent days as optimism from traders poured in. 

The supply-focused update sparked a sudden burst of enthusiasm amongst investors that pumped the ETH price 8% to highs of $2,820. The momentum also propelled the biggest ETH rivals, BNB and SOL, higher and added approximately $500B to the combined crypto market cap from last month’s lows. 

EIP 1559 is part of a series of upgrades to the ETH network packaged in the London fork. As a result, the ETH bulls appeared weakened as the major change approached. Still, market sentiment has now flipped bullish as investors anticipate the upgrade to introduce drastic changes to the gas fee structure on Ethereum. 

How EIP-1559 Could Impact ETH Prices

The crypto community views the latest software adjustment on Ethereum as a landmark event that will stabilize transaction fees on the network. EIP-1559 is expected to overhaul the way transactions are processed on the second-largest blockchain by providing gas fee predictability. 

The critical upgrade is the first step toward moving from the proof-of-work (POW) model to the more energy-efficient proof-of-stake (POS) model. 

The change will enhance network efficiency by burning a percentage of tokens paid to miners, creating a supply shock to help ETH close the Bitcoin market cap gap. 

As ETH token supplies shrink on exchanges, market participants expect the altcoin to become scarce and more valuable. According to Viktor Bunin, the protocol strategist at Bison Trails, new supply dynamics could lead to soaring ETH prices and increased adoption.

“Everyone should watch as the next few weeks unfold and financial models emerge quantifying the impact of the burning on the supply of ether, which may ultimately lead to price targets,” he noted.

Since it deployed the London fork earlier today, the Ethereum network is reportedly burning over $10K worth of ether per minute on average. A tweet from the popular website ultrasound. Money confirmed that it took 1559 ETH tokens out of circulation in under five hours on Thursday.

Analyst Identifies $40K as a Pivotal level for BTC 

The BTC price started a decent recovery above $38K as Gary Gensler, the new head of the US SEC, praised the crypto sector and its underlying blockchain technology. The bulls have now recaptured the psychological $40K level even as Ethereum dominates the conversation with the debut of its highly-anticipated London hard fork.

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Analyst Rekt Capital now sees the $40K mark as a make-or-break level for bitcoin. He argues that the bulls must flip this level into support if the flagship cryptocurrency is to enter another bullish phase in the short term.

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