Ethereum drops 13% but experts are convinced good news around the corner
Experts believe next month's 'London Hardfork' may prove to be a gamechanger for the Ethereum ecosystem
- The upcoming EIP 1559 seeks to bring down gas fee levels considerably, a pain point that has caused many projects to migrate from the Ether ecosystem recently.
- ETHs monthly losses currently lay in excess of 40%.
- The ETH/BTC pair has once again been showing increasing signs of decoupling in recent weeks.
After scaling up to a price point of AU $3,600 on June 7, many were expecting Ethereum, the second largest cryptocurrency in the market today, to continue on its path of upward ascent, especially with the currency's much awaited EIP 1559 reportedly set to go live next month. However, over the last 96 hours, the altcoin has dropped 14% of its value, currently trading at AU $3,200.
Providing her take on what's going on with Ethereum and what lies ahead for the digital currency, Marie Tatibouet, chief marketing officer for Gate.io, told Finder that despite all of the current turbulence, EIP 1559 still has the potential to change ETHs future in the near term. On a technical note she added:
"EIP-1559 brings in two crucial features. Firstly, it makes ETH a deflationary asset since it burns ETH tokens that would make up the "BASE FEE." This will have a positive effect on ETH's price as demand increases with time. Secondly, escalating gas fees are massive barriers to adoption for both users and developers. Post EIP-1559, the gas fees will be considerably more manageable."
ETH/BTC ratio pattern shows interesting developments
As per data made available online recently, it appears as though the Ethereum/Bitcoin ratio pattern has been changing quite unusually over the course of the past few weeks. In technical terms, over the past fortnight, ETH has been showcasing the 'high-beta Bitcoin' trend — i.e. whenever BTC tended to shoot up, the value of ETH shot up even more. When BTC plummeted, ETH did the same but even more dramatically.
Bitcoin/Ethereum Ratio Chart since mid-May (source: Bloomberg)
This development has not gone unnoticed, especially by those on Wall Street, as it seems to suggest that Ethereum may finally be coming into its own as a potential long term store of value. That said, it will be interesting to see how the future of the two premier crypto assets plays out from here on out.
Disclosure: The author owns a range of cryptocurrencies at the time of writing