Following the demise of cryptocurrency exchange FTX, Ethereum (ETH) is under intense selling pressure. According to Ali Martinez, ETH whales traded about a million coins in December 2022, escalating investor concerns. According to Martinez, whales with between $10,000 and $100,000 in ETH sold or dispersed around 880,000 coins. At the time of publication, trading volume had declined by 3.05% in 24 hours. However, trading volume increased 23% to $4.5 billion the day before, while the market cap fell 2%.
To put it mildly, Ethereum’s price performance in December was poor. The key causes of the market’s lack of momentum were poor fundamentals, a grim economic background, and a lack of network activity. However, after investigating whale wallets, it appears that the fundamental problem is rather more basic. According to on-chain statistics, Ethereum whales with up to 100,000 ETH have sold or moved up to 880,000 ETH since the beginning of the month. At least a portion of the money was most certainly sold on the market, mirroring the selling pressure we experienced all month.
Ethereum has had a difficult year, with its value plummeting by 75.5% from its all-time high and 70.4% in a single year. Many people are concerned that the value of ETH may fall much more as we enter the new year. ETH has dropped below $1200 and may continue to decrease if it does not rise over $1215. Furthermore, since mid-December, issuance has grown.
While trading activity on Ethereum has been slow in December, with the market’s low liquidity, merely 500,000 ETH of selling pressure would be enough to push the market’s second largest cryptocurrency below the $1,200 barrier.
Another significant contributor to active asset redistribution was the global trend of capital migrating from centralised cryptocurrency exchanges to self-custody. Although migration from exchanges to wallets is not directly tied to selling activities, it may be a factor since some investors choose to liquidate their holdings rather than simply shift them to their own wallets.
As previously said, the primary cause for the ETH price drop might be related to decreased network activity as more investors leave the sector for good, or at least until the market rebounds. At the time of writing, Ethereum is trading at $1,199, attempting to hold the $1,200 price mark, which serves as a platform for any advance toward the next resistance.
What may propel Ethereum higher?
With issuance growing, the most likely scenario would be a rise in coin issuance with a gradual decline in supply following the new year. If more investors return to the market and produce more activity, the market’s burning process will speed up.
Guy of Coin Bureau, a well-known cryptocurrency specialist, forecasts that Ethereum will have a spectacular year in 2023. Guy believes that the upcoming Ethereum Shanghai upgrade will lead Ether’s trend to reverse. The Shanghai update will be unveiled in the first quarter of 2023.
If billions of dollars in ETH tied up in smart contracts are released, the analyst believes that investors will be enticed to stake their tokens for a potentially stress-free investment experience. The Shanghai update, among other things, will allow ETH stakers and validators to withdraw cash from the Beacon Chain. At the time of publication, ETH was trading at $1,194.74, up 0.2% in the previous 24 hours. However, in the previous 14 days, the cryptocurrency has fallen by 8.8%.
The Merge, an upgrade to the Ethereum [ETH] network that has been much awaited, has piqued the curiosity of many individuals. The proof-of-work (PoW) phase of the network’s development will come to an end as it makes preparations to transition to the proof-of-stake (PoS) protocol. As a direct consequence of this, the network will almost certainly be upgraded, and it will also be greatly affected by the shift.
The Proof-of-Work (PoW) consensus algorithm is being replaced with the Proof-of-Stake (PoS) algorithm with the Merge update (PoS). In addition to this, it will change the role of miners to that of stakers, who will be responsible for verifying transactions on the blockchain.
Sharding is another essential part of the Ethereum ecosystem, which became an important part after the Ethereum Merge. The blockchain will be made more robust as a result of sharding, which is a crucial component of Ethereum 2.0.
What is the Ethereum merge?
The Ethereum blockchain, which powers the second most valuable cryptocurrency and many other technologies in the cryptocurrency ecosystem, such as non-fungible tokens, will get an update in the form of The Merge (NFTs). It’s anticipated to take place in September.
The proof-of-work paradigm is now used to power the Ethereum blockchain, much as it is used to power the Bitcoin blockchain. This approach requires nodes, which are individual computers that are connected to a larger network, to compete with one another to solve difficult mathematical problems. Those who are successful are then able to mine the subsequent block of a transaction and produce additional currencies.
The update will move Ethereum toward the proof-of-stake paradigm, which is a system that is both more ecologically friendly and efficient in terms of the use of energy. It involves selecting nodes via the use of an algorithm that gives precedence to nodes that possess a greater amount of a network’s money than any other nodes.
What exactly does “Ethereum Sharding” mean?
The word “sharding” is a fundamental concept derived from the field of computer science. It refers to the practice of horizontally slicing a database to help distribute the workload more evenly. Sharding Ethereum will be an update implemented in stages, each of which will contribute to scaling Ethereum and increasing its capacity.
The task of separating and equitably dispersing the load of a huge quantity of data may be simplified with the help of the sharding technique. Because of this distribution, the load will be less, there will be less congestion in the network, and the processing of transactions will go more quickly.
The blockchain will eventually break into shards, each of which will be able to operate independently of the others. Sharding will enable safe data storage needs distribution, make rollups cheaper, and make it simpler to operate nodes. It will also simplify the operation of nodes.
Through the use of sharding, the hardware requirements for operating a node may be reduced. Because it will allow users to operate the network using a laptop or even a phone, it will also help to increase the number of people who participate in the network.
When is it going to be available?
According to the statement made by the Ethereum Foundation, the first implementation of sharding will take place sometime in 2023. It relies mostly on the amount of development that may be made after the merger. Depending on how swiftly development develops after The Merge, the release of Sharding is projected to take place sometime in 2023. The capacity of Ethereum to store and retrieve data will be increased thanks to these shards; nevertheless, these shards will not be utilized for the execution of code.
On Tuesday, the inventor of Ethereum, Vitalik Buterin, said that the Ethereum merge is projected to take place “around” September 13 to September 15 and that this date is now on schedule. This is the day at which the proof-of-work consensus technique that requires a lot of energy will be abandoned by the second biggest cryptocurrency in the world.
The market shifts
The merging is only the most recent improvement to the Ethereum blockchain, which is being done in the interest of establishing a trustworthy decentralized environment for the future of money. The transition to proof of stake delivers several advantages, one of which is the alleviation of worries around energy use.
Block transactions are validated using proof of stake by validators who have bet a certain amount of their tokens on the outcome of the transaction. The greater the number of tokens that a person has linked to the blockchain, the greater the likelihood that they will be randomly selected to serve as a network validator.
In contrast to this, proof of work is an energy-intensive technique that depends on computers to solve mathematical formulas to mine tokens. This rate of energy consumption is a key critique of proof of work, which will remain the basis of Bitcoin mining when Ethereum abandons the procedure. Despite this criticism, proof of work remains the foundation of Bitcoin mining.
Apart from the problem with energy, and on top of the recent meltdowns of crypto lenders, the cryptocurrency sector as a whole is facing a multitude of macroeconomic issues. These concerns range from political tensions to high inflation rates to hawkish national monetary policies. These large-scale variables are generally regarded as the spark that ignited the latest bear market.
Price pressures are seen lately
In November of 2021, the price of a bitcoin hit an all-time high, which was $69,000. Since then, the price of Bitcoin along with the rest of the market has suffered as a result of the challenging economic circumstances. The short-term price forecast for the most popular cryptocurrency is still unclear as Bitcoin’s price continues to fluctuate and encounters some resistance near $20,000.
It is not apparent what type of event or change may assist Bitcoin is making a comeback. As the volatility of leading cryptocurrencies continues to worry mainstream investors, they may become more critical of the fundamentals of Bitcoin. Furthermore, the network upgrades that Ethereum is planning to implement to position its ecosystem as the currency of the future could place even more pressure on Bitcoin’s usability.
Vitalik Buterin voiced his worries about Bitcoin’s proof-of-work issuance model during an interview that took place one week ago with the journalist Noah Smith on the topic of security, governance, and consensus mechanism models. Buterin is concerned not just about the amount of energy that is being used in the present, but also about how the continuous issue of a proof-of-work token may impact future validation.
Following China’s crackdown on cryptocurrency mining, which resulted in a large reduction in the proportion of renewable energy sources that power the network, the study was strengthened. Alex de Vries, a researcher and skeptic of cryptocurrencies, observed that “Bitcoin became dirtier following the Chinese mining crackdown in 2021.”
Is the event being hyped unnecessarily?
However, not everyone is persuaded that this will result in Ethereum being the dominant cryptocurrency. The majority of the current narrative has been driven by the fact that analysts such as Glen Goodman from eToro have pointed out how the price of Ethereum has outperformed the price of Bitcoin in recent weeks. In the end, it is unclear what the future of Bitcoin will be like following the integration. There are several issues at play, including regulation, worries about energy use, and competitiveness. Inventors are apprehensive of the possible economic dangers at a time when their greatest rival is ready to claim a major technological advantage.
ETC Group has participated with a series of entities that have announced goals to support a potential proof of work (PoW) version of the Ethereum network.
The upgraded chain, should it finally appear following the network’s switch to a proof-of-stake (PoS) system, was earlier called ETHPoW and now it doesn’t exist.
All About ETP :
Though, the London-based crypto firm ETC Group aims to write down a new list of exchange-traded products (ETP). That is based on the native asset of the ETHPoW chain. It is issuing holders of its existing Ethereum ETP (ZETH) units of the new security at zero cost on a 1:1 unit basis.
This new ETP will be known as ETC Group Physical EthereumPoW (ETHWetc). It will be registered on Deutsche Borse’s Xetra under ticker ZETW, which is based on the imminent hard fork of Ethereum. The firm said that the official listing is expected to be held on September 16 this year which is shortly after the Beacon merge event.
What Is ETP?
An ETP is a kind of security. An ETP can be traded on a stock exchange. It must include its value tracking underlying security. For instance, an Ethereum ETP tracks the price of Ethereum. During that process, it allows investors to gain exposure to the cryptocurrency without the requirement to physically hold the asset.
The founder and co-CEO of ETC Group, Bradley Duke, noted in a statement, “When we launched ETC Group, we determined to holders of our digital asset-backed securities that the holders would profit from hard forks to the underlying digital assets and cryptocurrencies.” He further added, “We believe that it is the only right that investors in our products and services should receive the profit of this fork.”
Already Existed Token :
The Ethereum merge was resisted
Last month. A gang of crypto miners backed by Chinese entrepreneur Chandler Guo introduced a campaign to resist Ethereum’s upcoming transition to PoS by forking the network and developing an alternate form of Ethereum minable via the proof-of-work (PoW) mechanism.
Mainly, a version of the ETHPoW (ETHW) token is denoting a debt relationship between two parties. The token is already traded on multiple crypto exchanges such as Poloniex, MEXC,Gate.io, and Digifinex.
The largest crypto exchange in America, Coinbase recently stated that it will consider listing ETHW or other forked Ethereum tokens following the merge. But Binance did not abandon the possibility of eventually listing ETHW either.
On the other hand, the largest non-fungible token (NFT) marketplace, OpenSea, said that any Ethereum forks will not be available on the platform. The platform is committed to only supporting NFTs on the upgraded Ethereum PoS chain.
At the beginning of August, A version of ETHW touched $141 amid an initial round of buzz in the spotlight. However, it has dropped heavily since then. The token has decreased 17.35% over the past 24 hours. It is now trading at $39.
Notably, Ethereum fell 7% recently. The token currently sits nearly at $1,544.
Mentionable, the Ethereum merge is now the most anticipated upgrade in the market. It is about to launch between September 13 to 15. The merge is promised to enhance the main nets’ performance through the PoS consensus mechanism. While the BTC is still running at the PoW mechanism. But the second top currency, ETH, believes to be more advanced in this competitive market. The upgrade will increase the transaction speed and reduce the fees. It will be a less energy-consuming service. The stakers are going to get a massive opportunity through this merger. Investors are getting their way back through this upgrade.
Ethereum is the world’s second biggest digital currency by market capitalization leaped to the price level of $ 1,347.69 throughout the week and has since mobilized to nearly $1,500. According to the expert’s opinions, the Ethereum latest update to Proof-of-Stake is one of the probable elements behind ETH’s new rise.
For those who don’t know about the ETH update, the main purpose of the upgrade is to improve the network and make it better for its users. This update is being considered as one of the most important ones that can be very beneficial for the whole ecosystem and can completely change it. This may also have long lasting effects on the whole crypto market.
Ethereum is at the top right now in the digital currency market however, even after going through several hacks, Solana remains a significant rival of ETH. For those who don’t know it already, just recently, MNGO, which is a decentralized SOLANA platform, was exploited for more than $100 million. The incident was at first reported on Twitter by blockchain reviewers who stated that the attacker successfully took control of their Mango collateral. However, after a while, Mango also affirmed the incident in a tweet by expressing that it was “investigating an exploit where a hacker successfully emptied funds out of Mango by means of oracle price manipulation.
As per Solana Labs co-founder Anatoly Yakovenko, they keep on tracking the success of SOL against ETH. And, this is clearly the reason that even after the exploits, they are able to compete with the huge crypto currency platform. He also stated that people consider SOL as an ETH killer even after ETH up-gradation.
However, on the other hand, Bitcoin, by all accounts, seems to be following Ethereum’s footpath. While the chances seem to incline toward the bulls, a break of support levels could flag a nullification of the bullish thesis. ETH must need to hold to the price level of $1,400 in order to keep away from a downswing to $1,300. Likewise, in the event that BTC experiences a dismissal at $22,600, it could experience a fall down to $21,400.
Be it SOL, ETH or BTC, all the top coins are trying to do their best in the current situation. In the clash of all these top crypto currencies, let’s see who will be at the top in the coming days.