While Ethereum is trading above $2,500, analysts emphasize that these 3 factors may put the ETH price under pressure, no matter how positive the situation is in the short term. Details are as follows…
What happened in Ethereum (ETH)?
Since Ethereum founder Vitalik Buterin gave a speech at the StartmeupHK festival, the price of ETH has been on a downward trend. In addition, Vitalik stated on May 27 that the development team has differences on some issues and the transition to PoS will be delayed. At the same time, the expected "Phase One" on Ethereum has been postponed to 2022, as we quoted as Kriptokoin.com. Otherwise, the decentralized nature of DeFi may not be entirely beneficial, as analysts have stated that it may need to execute fragmented transactions from the relay chain. The price of ETH with these developments is also unstable. The reasons are as follows…
It does not seem possible to determine the reasons for Ethereum's decline after the peak. However, rising gas fees are definitely affecting investors' expectations. The bottom line is how limited ETH is and the consequences of migration to BSC and Polygon's networks.
In these matters, the chart above shows the average gas fee of $45 a month after the Berlin upgrade launched on April 15th. Consensus in the Ethereum community paved the way for the EIP-1559 protocol for the London hard fork, which Berlin was less effective in the short term but expected on August 4. This leads to one of the 3 factors that could negatively affect the price of Ether in the short term.
London hard fork delay may have some impact
The Ethereum London hard fork was announced as part of the roadmap for the final ETH 2 release in 2022. The long-awaited update is expected to happen on August 4, but has been delayed to a later date as the previous schedule indicated in late July. Meanwhile, miners will suffer the most with EIP-1159, which aims to burn some of the fees generated on the Ethereum blockchain, thereby reducing their revenue. Additionally, the EIP-3554 offers a progressive difficulty setting that encourages the transition to the new PoS. By the way, the delivery tracking record of Ethereum developers also does not guarantee. If a partial raise occurs and more controversial changes are delayed, it could hit Ethereum price as part of the current rally is based on the exaggerated attitude surrounding the hard fork.
Mining for Ethereum gradually becomes PoS
For miners, the source of income from Ethereum is cut. This time the problem is in the social part. It may happen over time that some competitor network advantages emerge, after miners gradually lose their income. Also, while most smart contract blockchains are designed for PoS, some lesser-known projects may modify their algorithms to support Ethash mining. Experts point out that the possibility of applying an additional layer of security using the extra hash power caused by an Ethereum miner drug of Binance Chain or Solana is on the table. While this scenario is remote, it will undoubtedly cause a pressure on the Ethereum price, according to analysts.
Curve and AAVE have more space when multi-stranded dApps are delayed
Finally, the longer it takes to deploy ETH 2 and update the dApps code to support Shardin functionality, the more motivated for add multi-chain support, according to analysts. In this case, it could provide additional support for non-Ethereum blockchains for the two leading DeFi protocols, Curve and AAVE. As a competitor to Ethereum, Polygon holds $550 million AAVE and $1.8 billion Curve contracts. In the final analysis, the most likely Ethereum killer will be the network itself, as the delayed expansion decision may push users and dApps towards alternative solutions. At the same time, the move to POS leaves more room to strengthen competing blockchains.
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