In this article, we will discuss where is Ethereum headed. The crypto market is known to be highly volatile, predicting future price points of Ethereum is a difficult task and many other factors influence the price. So, you will have to take care of every single thing to count.
Where is Ethereum Headed?
The current price of Ethereum is around $1230 and it is currently ranked #2 out of all cryptocurrencies. The amount of supply currently in circulation for Ethereum is over 120 million with a total market capitalization of over $150,000,000,000.
It's impossible to pinpoint the reason behind Ether's sharp fall from its all-time high, but the surge gas fees certainly impacted investors' expectations. Not only did it make evident how limited the network was, but it also inspired net traders to experiment with alter , like Binance Smart Chain (BSC) and Polygon's layer-two solution.
Factors Impacting Ether's Price
Ether's price might be bullish in the short term, but there are a handful of factors that could keep the price pinned in its current range. This takes us to one of the three factors that could negatively impact Ether's price in the short term.
London fork delay
The Ethereum London hard fork is part of the roadmap to the final Ethereum 2.0 release in 2022. The long-awaited update is scheduled for Aug. 4 but has been delayed already, as the previous schedule mentioned late July.
Miners will be the most affected by the EIP-1159 proposal, which aims to burn part of the fees generated on the Ethereum blockchain, hence reducing their revenue. Furthermore, EIP-3554 introduces an incremental difficulty adjustment that incentivizes the migration to the new proof -of-stake blockchain.
The delivery track record of Ethereum developers also does not inspire confidence. If a partial upgrade were to take place and the more controversial changes were delayed, Ether's price could slide, as a portion of the current rally is built on the hype surrounding the hard for .
Miner exodus
This time around, the main concern isn't technical but social. Once it becomes clear for Ethereum miners that their revenue source will be gradually cut off, it is a matter of time until some competing network benefits.
Even though most smart contract blockchains have been designed for the proof of stake consensus model, some lesser-known projects could change their algorithm to support Ethash mining.
Analysts should not discard the possibility that Binance Chain or Solana could implement an additional security layer using the extra hashing power caused by an Ethereum miner exodus. Although this scenario is distant, these movements would undoubtedly put pressure on Ether's
Multichain DApps
The longer it takes for Eth2 to be fully implemented and for decentralized applications to upgrade their code to support parallel processing (sharding) capabilities, the higher the incentives for adding multichain support.
Curve and Aave, the two leading DeFi protocols by total value locked, have both added support for blockchains other than Ethereum. Meanwhile, Polygon holds $550 million worth of Curve contracts and Aave holds another $1.8 billion, according to data from DeFi Llama.
In the end, the most likely “Ethereum killer” is the network itself because postponing the scaling solution would push users and DApps to alternative solutions. At the same time, the migration to PoS opens room to strengthen competing blockchains.
Bottom Line
It is really difficult to estimate the upcoming value of a cryptocurrency and the direction where it is heading. But if you know the factors affecting the direction, you will be able to investigate where is Ethereum headed.
