Similar to its big brother Bitcoin, Ethereum, the second largest cryptocurrency by market capitalization, has also recorded strong price increases in recent months. These factors could provide further tailwind.
• Ethereum surpasses $3,000
• Dencun upgrade is intended to increase network scalability and efficiency
• Hope for Ethereum spot ETF fuels
Ethereum, the second largest cryptocurrency by market capitalization, has seen strong growth in recent months. The cyber currency has recorded a price increase of 77.8 percent in the last twelve months. The digital currency was recently able to jump above the $3,000 mark, marking its highest level since April 2022.
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In addition to Ethereum, the original cyber currency Bitcoin can also look forward to significant price gains in the last few months. It only recently went above the $53,000 mark again. The approval of Bitcoin spot ETFs by the SEC in the USA at the beginning of 2024 provided a particular tailwind. Although crypto prices initially fell following the news of the approval, they have since seen a steady upward movement.
Dencun upgrade is intended to increase network scalability and efficiency
BTC-Echo claims to have identified an additional driver for the Ethereum rally in the last few weeks: the Dencun upgrade. The upgrade, also known as the Cancun-Deneb upgrade, is expected to be completed in the first quarter of 2024 and is actually a combination of two upgrades – the Cancun and the Deneb upgrade, with one targeting the Consensus Layer, while the other concerns the execution layer.
Overall, the new upgrade aims to improve the scalability and efficiency of the network through five EIPs (Ethereum Improvement Proposals). EIPs are suggestions that can be submitted, discussed and reviewed by the Ethereum community to improve the network. If they are well received, they will be implemented as part of an upgrade. After the Dencun upgrade, Ethereum end users will then benefit from lower gas fees for Layer 2 transactions. As with every upgrade, this update is a hard fork, as Consensys explains in a blog entry.
Before the upgrade takes place, the changes are put through their paces in a series of test networks. There are also various EIPs that are still being considered for the upgrade.
Hope for Ethereum spot ETF fuels
In addition to the Dencun upgrade, the latest Ethereum price jump is also likely to be based on hopes that, in addition to the Bitcoin spot ETFs, there could also be the first Ethereum ETFs in the near future. Asset manager Franklin Templeton, another product provider, has submitted an application to the SEC for approval of an Ethereum spot ETF. The authority has received a total of eight such applications from various providers. The largest applicants include BlackRock and Fidelity, which were also among those whose Bitcoin ETFs were approved in January. However, just last month, the US Securities and Exchange Commission postponed the decision on crypto asset manager Grayscale’s application to convert its Ethereum trust into an Ethereum spot ETF. BlackRock’s decision regarding an ETH ETF was also postponed. First, the fund provider VanEck submitted an application for an Ethereum spot ETF to the SEC, which must either reject or approve it by May 23, 2024. Should approval take place, this should also provide a long-term boost.
SwissOne Capital chief strategist Kenny Hearn estimates in an interview with CoinDesk that the cryptocurrency could easily move towards $3,150 to $3,300 from its current level. “The next level after that would be $3,600, and we think that’s easy to achieve in the next month or so as the alts [Altcoins, Anmerk. d. Red.] “continue to catch up,” said Hearn. Now it only remains to be seen whether this bullish forecast comes true.
Editorial team finanzen.net