Per a report from the Cambridge Center for Alternative Finance (CCAF), fossil fuels have been the primary energy source for BTC mining since the start of the year. The CCAF recently updated its Cambridge Bitcoin Electricity Consumption Index (CBECI). Its study claims that 62% of all the energy the leading token has consumed so far consists of coal-based energy. BTC’s Energy-Intensive Mining Bitcoin employs the proof-of-work consensus mechanism to create new tokens and validate transactions on the blockchain. The PoW…
The Ethereum blockchain is currently in the middle of a significant transition as its developers are looking to bring the dawn of Ethereum 2.0. This transition will achieve a great deal, including making Ethereum proof of stake (PoS) blockchain.
ETH 2.0 has built a lot of enthusiasm around it. Furthermore, the excitement grows as several of its competitors have made similar moves. But, what could this transition mean for Ethereum – and Ether, the coin?
A Background to Ethereum 2.0
As many know, Ether is the second most valuable cryptocurrency in the world. Its primary value is tied to the Ethereum blockchain, which is the most popular and functional blockchain platform.
Ethereum’s functionality comes from the fact that it has smart contracts. These contracts make it possible for developers to build decentralized applications (dApps). Everything about cryptocurrencies will need to run on a DApp at some point, so Ethereum has a lot of use.
Everything – from decentralized finance (DeFi) protocols to non-fungible token (NFT) marketplaces and more – needs a DApp. So, developers have been quick to build on Ethereum to meet the growing market demand.
The problem, however, is that Ethereum isn’t so scalable. More people have been flocking to use the blockchain over the past years. This has led to an increase in traffic and congestion on the network. This has also led to a rise in gas fees. Users pay the latter to conduct transactions and other processes on the blockchain.
The Ethereum Foundation proposed Ethereum 2.0 to solve this problem. This upgrade should address the scalability and gas fee issues. Meanwhile, it should also move Ethereum from a proof of work (PoW) blockchain to PoS. On paper, everything seems ready to go.
In September, Ethereum completed the London hard fork – an essential part of the transition. The hard fork introduced a token burn system, ensuring that more ETH tokens get destroyed with transactions. The purpose of this is to make Ether a deflationary asset, like Bitcoin. Without going into the complex Economics, the process should help improve Ether’s value over time.
With the successful London hard fork, it is now a question of how high Ether can go when the complete Ethereum 2.0 transition comes. Estimates show that the upgrade is expected to be done by 2022, although initial forecasts said 2019 and Ethereum missed that deadline. So, no one really knows.
Hype Starts to Build Up
Ahead of Ethereum’s transition, industry analysts have been touting ETH to surge significantly. Even more, they believe it will surpass Bitcoin as the most valuable cryptocurrency. Industry insiders even have a name for this already – the flippening.
The biggest company to throw its weight behind Ether appears to be Standard Chartered – the British banking giant earlier this month. Standard Chartered published an Ethereum investor guide. The bank pointed out that Ether could rise as Ethereum 2.0 draws nearer.
Standard Chartered puts its forecast for ETH between $20,000 and $26,000, while the bank sees Bitcoin on the path to $150,000 or $175,000.
A range of USD 26,000-35,000 may appear high compared to the current ETH price (just below USD 4,000), but we think the current price reflects both the relative complexity of ETH (versus BTC) and the uncertainty around ETHs development,” the bank says.
Analysis: Where is ETH Now? How Far Could It Go?
For now, it remains unsure. Ether has already had an impressive year, with the coin’s value rising by 296.1 percent as of press time.
The current market is facing a bit of a bearish trend, with news of a Chinese crackdown on cryptocurrencies dragging coin prices down again. As a result, ETH is now trading below its short-term moving average (MA) indicators.
However, long-term investors will be glad to know that the coin is still above its 200-day and 200-day MAs. This means it is over $2,746.82 and $2,627.46, respectively.
ETH’s moving average convergence divergence (MACD) is negative, meaning that the coin is giving off sell signals. However, a move away from the bearish market will see things return positive. The coin’s relative strength index (RSI) of 40.41 shows that ETH is very much underbought.
The long-term repercussions of Ethereum 2.0 are sure to be extensive. However, they will primarily depend on how soon the upgrade can reach completion. Several competing blockchains are already doing fantastic work in the industry, and even Cardano recently launched smart contracts with its Alonzo hard fork.
So, the Ethereum Foundation will need to move quickly and implement its transition. Only that way, they may capitalize on the growth of the market. And bring even more significant gains to Ether.
If the Foundation can get its act together, then nothing really stops Ether. Soon, it should hit the lofty heights that Standard Chartered and several others have placed.