- Stagnant Ethereum trend awaits the next big ETH 2.0 update for direction
- ETH 2.0 set to bring extensive upgrades and performance improvements
- DeFi realm also looking forward to fundamental changes promised by ETH 2.0
- Long-term bullish Ethereum trend intact before the launch on December 1
Ethereum trend looks to ETH 2.0 for further direction
The launch of the second Ethereum protocol, ETH 2.0, is near, and it will be the biggest event of 2020 for the ETH community. Also called Serenity, the protocol is already referred to as the most extensive upgrade to the ETH network ever comprising of multiple performances, security, and fundamental changes.
Most importantly, ETH 2.0 will bring ‘Proof-of-Stake,’ thereby creating more passive income opportunities for ETH holders. The upgrade will impact the entire ETH ecosystem, including DeFi, and have a profound effect on the Ethereum trend.
An overwhelming majority of ETH traders are confident that ETH 2.0 will help ETH/USD touch new highs. Despite the current muted Ethereum trend, both investors and traders have high hopes for the upcoming launch. Besides adding more value to the Ethereum price, the upgrade itself will set the future tone for weekly Ethereum trend.
Here’s all you need to know about the possible impact of ETH 2.0 on the Ethereum trend.
Prepare for bearish movement before the launch
The crucial ETH 2.0 component called ‘Beacon Chain’ is going to launch on December 1 as per the official announcement. However, dates are not concrete in the crypto realm. Technically, the project goes ahead if a minimum of 16,384 validators contributes 524,288 ETH towards the network. As per the current exchange rate, the amount comes around $200 million. If the amount contribution doesn’t happen one week before the December 1 deadline, the launch must be postponed.
As of today, staking contribution has reached approximately 57,000 ETH, which represents around 10 percent of the total required amount. So, there’s a big question mark hanging over the launch date of ETH 2.0. The bearish overtone is already evident in Ethereum trend as the price breaks below $450 support.
ETH 1.0 will still exist after the ETH 2.0 launch
The current Ethereum version won’t die the day ETH 2.0 takes charge. Both the networks will run in parallel, and users will continue their business as usual. The idea is to minimize the transfer-related problems and avoid a shock to the end-users. ETH-based applications will operate normally using their regular protocols.
Developers will have to carefully migrate to the new network by navigating through a complex migration sequence. This means that the actual transfer/migration will take many more months as developers will have to be careful about not interrupting their application ecosystem.
Timeframe to freeze 32 ETH is not clear
The new ETH 2.0 network promises a 7 percent per annum passive income to the ETH holders. This critical differentiating factor is a crucial component of the upcoming upgrade. However, a deposit of 32 ETH, or $14,700, is required to become a validator. Moreover, the deposit will be frozen till the network moves towards Phase 2. The migration to Phase 2 is expected to take two years, and depositors won’t get back their 32 ETH deposit till then.
The strict deposit condition may discourage many investors from joining the network. The extended period of deposit will further dissuade them from contributing towards the deposit.
ETH 2.0 has multiple clients to boost competitiveness
Another highlight of ETH 2.0 is the availability of multiple clients. At present, the Ethereum boasts of four validators, including Teku, Lighthouse, Prysm, and Nimbys. Users have the choice to work with any of them. The new network will see the number of validators grow, thereby giving the users more choice.
The higher number of validators will bring more diversity to the network. The network will be more diverse, rich, and competitive. Validators or their cartel won’t have a monopoly over the ETH network. This will help bring down prices as validators will compete with each other to secure their user base.
ETH 2.0 launch and ETH trend implications
At the time of writing, ETH/USD is trading near $445. The hourly timeframes were due for a correction after the last week’s rally towards $480. The price has been repeatedly rejected from the $478 resistance mark. Investors believe that ETH 2.0 has the potential to push prices towards $700 in the near term post the launch.
The incentivization of ETH coins due to Proof-of-Stake will further give impetus to the price in the near term. The shrinking token supply will also help boost the price due to the demand-supply principle. The immediate effect on price movement is unknown, but traders will look to paint a bullish picture. However, the picture will become clear in the last week of November as the number of validators emerges.
Technically, the ETH/USD pair will have to cross $478 resistance and close above $500 for any significant movement to take place. As of now, the next week looks to be a consolidation period. Price can touch lower support levels at $430 before any bullish momentum starts building on the hourly timeframes. The Ethereum trend is now firmly set to follow the ETH 2.0 dictate.
Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.