Summary
- ETH has recovered from the recent market consolidation.
- Minimal institutional adoption has slowed down a potential rise to new highs.
- Internal improvements are being undertaken on Ethereum to increase its efficiency and improve market performance in the coming days.
ETH’s renewed attempts to hit new highs faced turbulence today, falling 1.8% in 24 hours to trade at $1,798 at the time of writing. By that time, $7.12 billion worth of ETH volume had been traded while the year-to-date returns stood at +142%. Ether has risen by about $212 or 14% in the past week, following a market consolidation that had seen prices sliding down.
Recent developments in the market have led to strongly-established institutional confidence in ETH. This helped prevent panic selling during the market correction.
Engineering a rise from within
Ethereum has been working on a solution to congestion on its network, which has often resulted in costly slow-downs in processing. Ethereum’s co-founder, Vitalik Buterin, has this week revealed that the network would soon release a two-layer solution to its processing.
Buterin has appraised the improvement as being capable of scaling the Ethereum network by a factor of 100. It is set for release in the next few weeks and will certainly boost Ether’s performance.
A key existential threat to Ethereum’s growth has been its high gas fees. This has seen it come under increasing pressure from Polkadot and Cardano in the smart contracts and DeFi segments.
The network has since announced that it is working on Ethereum Improvement Proposal (EIP) 1559, which is designed to lower the fees. However, Ethereum’s miners are opposed to the upgrade, which they rightfully predict will cut their profits drastically.
With EIP 1559, users will only pay a base fee directly to the Ethereum network, as opposed to paying miners. The upgrade will make it optional for users to pay miners directly, in a manner likely to leave miners dependent on “tips.”
As a result of this new development, there are fears that some miners may launch attacks on the network as a form of protest. Such an act could derail efforts to enhance the network’s efficiency and result in zero-sum gains.
Marginal institutional activity
Earlier this week, ETC Group, which specializes in financial services, launched an Ethereum exchange-traded product (ETP). The group CEO said that the move was informed by an upsurge in demand for Ethereum.
The company has therefore launched the ETH ETP as a way of giving investors options on their exposure to the cryptocurrency. With the ETP, investors will be able to trade in ETH price fluctuations without buying it directly.
In a related market action, Crypto Volatility Index (CVI) has now enabled depositing of Ether by its users. With that development, CVI will offer a unique opportunity for traders to buy and sell their positions based on their prediction of the price volatility of ETH.
This is the second CVI by COTI network developers, following last year’s launch of Bitcoin CVI. This is a niche segment through which investors will gain exposure to ETH and Bitcoin, albeit without actually buying them.
Elsewhere, Amazon has extended its blockchain service by integrating Ethereum into it. The move will enable developers to easily instantiate Ethereum nodes. Importantly, it has negated the need to develop the infrastructure or manage the infrastructure required to run the program. The adoption of Ethereum by Amazon is a vote of confidence in its efficiency.
Technical outlook
ETH will find the first support at $1,658, with the second support level at $1,736. The first resistance level will be established at $1,839. Beyond that price, a bullish march towards retesting the record high prices will have to contend with a psychological barrier at $1,900.
