Ethereum, the king altcoin, has been attracting a lot of attention lately. After CoinGeckothe coin appreciated by 4.5% over the week period.
This is due to the forthcoming “Shanghai” upgrade expected to improve the overall usability of Ethereum’s Layer 1 chain.
The term “Layer 1” describes the basic components of a network. Transactions on L1 blockchains do not require the involvement of additional networks for verification or settlement.
Image: Gfinity Esports
The essence of the upgrade
After last year’s widely acclaimed shift from proof-of-work to proof-of-stake consensus, Ethereum’s next major update is called Shanghai.
The team has previously mentioned that the upcoming Shanghai upgrade, due to be released for this September or later, will allow ETH to be withdrawn, among other minor improvements.
The most notable development from Shanghai is the proposal known as EIP-4895, which will allow those involved in ETH’s involvement in the Ethereum 2.0 contract to withdraw cash and staking incentives.
Another key highlight is the planned reduction in Layer 2 gas fees as improvements are made to L2s’ rollup system. This would allow more data to be processed in a single transaction, resulting in lower fees.
In the short term: anything can happen
While this news is great, the hype generated by this event could be sensational. ETH saw the merger, which was widely publicized before the change drop after the consensus change is complete.
This surge could be another sell-the-news event that is highly expected to see the asset rise in price. But since the upgrade is taking so long, further declines are possible as macroeconomics plays a big role in ETH price movements.
As of this writing, ETH is trading at $1,244, up 4.5% over the past seven days, data from Coingecko shows.
ETH Total Market Cap at $152 Billion on the Daily Chart | Chart: TradingView.com
If next week Consumer Price Index (CPI) Data sees macro trend improving, we could see Fed getting loose as it is aggressive try the inflation to pin down at 2%. A dovish central bank will see more investors confident that the market is safe, thus shifting capital into more volatile assets like crypto.
In the meantime, Ethereum investors and traders should focus on the consolidation above the $1,244 level. Bulls can and should do one in the short term Resistance targeting $1,270 to take profits.
But just days before the CPI data release, investors and traders should benefit from this small gain made up through Ethereum this week.
-Featured Image: Medium
Source: Crypto News Deutsch