- Prices are likely to gain from the imminent launch of EIP 1559.
- China’s hard stance against cryptocurrencies may be neutralized by other countries’ embracing of the assets.
- DeFi to play a key role in revitalizing long term price rise.
Ether was resilient on Saturday, trading at $1,874 and losing 0.13% in 24 hours, as its volatility within small margins of $2,000 continued. The cryptocurrency has lost about 11% of its value in the past week, but market fundamentals remain mostly favorable. Therefore, an establishment above $2,000 in the next week looks possible.
EIP 1559 and the next big leap
Ethereum’s next big break is likely to come from the expected release of EIP 1559. The protocol is designed to significantly streamline the gas fees charged on the Ethereum network by introducing base fees. In addition, the upgrade will effectively herald demand-driven gas fees, which will give users a greater say in choosing their ideal gas fees.
Specifically, it will enable them to specify a “bid price” for their ETH transactions and state how much they wish to pay their miner. This will result in fee refunds to users on the difference between the fees charged and the maximum market fees. EIP 1559 will also enable the burning of a portion of the transaction fees, which will put ETH on a higher pedestal based on deflationary attributes. It will also be another move forward towards the transition to Proof of Stake.
Why cryptos are likely to overcome China’s aggression
The genesis of the current turbulence in the crypto market can be traced to China’s crackdown on mining activities from back in April. However, things could soon change. In Brazil, Ethereum has scored a big win, following the approval of its ETF. The ETF was approved by Brazil’s securities commission last week.
The ETF will be South America’s first, and it will create an avenue for thousands of investors to get alternative exposure to Ether’s price movement. Importantly, it shows ETH’s strong stance at a time when the crypto market is turbulent. The Brazilian ETF will be tethered to the CME CF Ether reference rate.
For the crypto industry, the approval of another ETF in one of the world’s most significant economies is a strong vote of confidence in the future of the industry. Canada is the other large economy with a positive stance on cryptocurrencies, having approved 3 ETFs so far this year. Compared to its mainstream fiat currency sector, the cryptocurrency sector is still in its infancy. Therefore, despite the massive losses incurred since April, the long-term growth of cryptocurrencies still looks promising.
DeFi is still strong, but security vulnerabilities won’t go away
Ether’s growth will still be significantly influenced by DeFi. The segment is largely built on the Ethereum ecosystem and currently has about $50 billion locked up. However, persisting vulnerabilities continue to threaten its growth. In the latest occurrence, ThorChain has revealed that it lost about $5 million to hackers who exploited a weakness on its Chaosnet.
Technical analysis
ETHUSD price is currently below the 50% Fibonacci retracement and has gone on to touch the 38.2% level. This shows that a breakout is possible. The RSI is at 38, depicting a neutral momentum.
If the bulls take charge, the price could rise to the $2,150 resistance level. However, a bearish charge may pull the market to $1,822.