Ethereum is going parabolic before the Eth2.0 deadline cut-off

Ether (the Ethereum token) is up nearly 500% this year in a huge rally that has gone nearly unnoticed outside crypto circles. 

 

Must know

  • The price of ETH has broken out of a 2-year consolidation above $500 to reach its highest since January 2018.
  • ETH/BTC. Ether is now seeing its price increase relative to Bitcoin for the first time since September.
  • Excitement is building about the launch of Ethereum 2.0, which has a conditional deadline of December 1. Eth2 is designed to improve the transaction capacity of the Ethereum blockchain network
  • ‘Gas usage’ is rising alongside the price- showing people are using the Ethereum network more, not just trading the token (ether)

 

Price breakout

Ether is building on a price breakout, having now doubled since it rose above $300 resistance to $600. But there is still a long way to go until the ETH price will have fully recovered its steep drop from a record high near $1350.

 

Ether / USD (3 years)

 

The rise in cryptocurrencies in the past month has turned parabolic, with Ethereum rising to $500 on Friday, then reaching $600 by Monday. This increases the chance of a near-term pullback but while the price remains above $300, it remains in a longer term uptrend.

 

Race against Bitcoin

Having been stable throughout the early months of the pandemic, the Ethereum/Bitcoin relative price broke out with the global relief rally across the summer. It topped out in September when stock markets rolled over and Bitcoin started to accelerate above $10,000. In the last week or so Ethereum is swung higher in what could be the beginning of a wider crypto-asset rally, rather than the narrow Bitcoin rally of the past two months.

 

Ethereum relative to Bitcoin (year to date)

 

Ethereum 2.0

Ethereum 2.0 will be launched on December 1st but only if the minimum stake threshold is met for the deposit contract.

 

Define: Staking

The process of staking involves locking up an amount of a given cryptocurrency in a wallet to participate in the operation of a blockchain in return for rewards. - Cointelegraph

 

The contract must collect 16384 deposits of 32 ETH each, a total of 524,288 ETH or about $200 million, to proceed with the launch. This sum needs to be collected a week in advance (November 24). According to Dune Analytics, the stake hit a new ATM at 50% of the required amount but looks like it will fall short of 100%.

 

Ethereum ETH

 

There have been some questions above the attractiveness of the terms of participating in ETH 2.0. Stakers would be offered yields under 10% but would be sacrificing liquidity because they would not be able to withdraw the stake for an unknown lockout period dictated by the implementations of phase 1 and 2 of the launch, which could take years.

 

Ethereum gas used is rising

Even the hardiest enthusiast will probably have to concede that cryptocurrency markets are little more prone to pump and dump schemes than other asset classes. This is because the anonymity encourages unethical behaviour that might not exist when ownership is more traceable, but also because the schemes often originate in internet chat rooms, something cryptocurrency enthusiasts do anyway to share information and code.

That makes the rise in Ethereum daily gas usage especially important to show that the rise in prices is being backed up by ‘fundamentals’ i.e. more active users on the Ethereum network.

 

Definition: Gas

Gas refers to the fee, or pricing value, required successfully conducting a transaction or executing a contract on the Ethereum blockchain platform. – Investopedia

 

This goes back to one of the fundamental appeals of Ethereum, and its token Ether. The Ethereum network is the home to growing numbers of DeFi users as well as other all the ‘dapps’ that use the network for finance, gaming and even social media. The larger and more useful the Ethereum network, in theory, the greater the value of Ether coins.

 

 

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