Ethereum Price Prediction: ETH Could Fall to $1,400 if This Happens

Ethereum Price Prediction: ETH Could Fall to $1,400 if This Happens

The Ethereum price is in trouble as the sell-off of cryptocurrencies accelerates. ETH is trading at $1,590, which is 20% below where it was last week. Its market cap has dropped to more than $184 billion. Other currencies like Bitcoin and Binance Coin have also plunged.

What happened: The ETH price has dropped sharply today mostly because of the weakness in BTC. The Bitcoin has dropped substantially as investors react to news that Fidelity was launching a Bitcoin to track the Fidelity Bitcoin index. If accepted, it will be the first Bitcoin ETF in the United States.

Therefore, Bitcoin probably declined as investors exit their holdings in the Grayscale Bitcoin Trust, the best-known BTC investing vehicle in the US. However, the trust is known for its high fees, which makes it undesirable to most traders. Therefore, investors are likely exiting the trust as they wait for the ETF, which will likely be cheaper to invest in.

Advertisement

Ethereum price is also falling because of the challenges facing the Decentralized Finance (DeFi) industry. Recent data shows that the total value locked has dropped to $41 billion. This is lower than the all-time high of more than $45 billion.

Finally, the ETH price is falling because of the rising bond yields. The ten-year, 30-year, and 2-year bond yields have all risen after falling recently.

Ethereum price technical forecast

Looking back, as I had written on Monday, the current price action of Ethereum price was inevitable and easy to see. The four-hour chart shows that the ETH had formed two patterns that are known for being bearish. It formed an ascending wedge pattern and a small head and shoulders pattern. And overnight, the pair moved below the neckline of this pattern at $1,700.

Therefore, in the immediate short term, the ETH price sell-off could accelerate as bears target the second support of the standard pivot point at $1512. A break below this support will open the possibility that the currency will fall to $1400.

Don’t miss a beat! Follow us on Telegram and Twitter.

ETH price chart

More content

Neo launches N3 amid high Ethereum gas fees · TechNode

Neo, an Ethereum alternative and one of China’s oldest blockchain protocols, is starting to roll out a third version of its public blockchain infrastructure, dubbed N3.

Why it matters: N3 is a make-it-or-break-it moment for one of China’s most promising and globally recognized blockchain projects. The team has been working on the update for years. On paper, N3 hits all the right notes for becoming a widely used blockchain protocol. But it will need to stand out from an increasingly competitive crowd.

The upgrade comes at an opportune time: The Ethereum network is facing critical capacity challenges, meanwhile the Chinese government highlighted blockchain as a strategically important technology in the latest Five-Year Plan.

Founded in 2013, Neo is one of many Ethereum alternatives looking to attract developers to build decentralized applications on its blockchain.

Details: The original planned launch date for Neo’s third iteration was in 2020, but it was pushed back to Q1 2021 because the system wasn’t ready, Da Hongfei, co-founder of Neo, told TechNode. It is difficult to predict a specific time for a community-driven project, Da said. Like most public blockchains, the code was developed by a small team of core developers and a wider global developer community.

N3 will increase transaction speed on the network from 1,000 per second to 5,000 and reduce transaction charges, known as “gas fees,” by 100 times, according to a Neo press release emailed to TechNode.

Cheap gas is strategically important to compete with the Ethereum network, whose rocketing transaction fees have sent developers looking for greener pastures.

The new version of the chain will also include oracle integration, a decentralized file storage solution similar to Filecoin’s IPFS, and a new governance mechanism.

Oracles like Chainlink and decentralized storage like Filecoin are relatively new, viable blockchain features. When Chainlink and Filecoin broke out with their solutions in 2020, their coin prices soared. Just like a car needs gasoline to run, the Ethereum virtual machine needs gas. Gas fees are essentially transaction fees that users pay to miners to include their transactions in blocks, which make up the ever-growing blockchain ledger. Ethereum miners can pick which transactions to execute, so the higher the demand for execution—reflecting an increase in the number of people wanting to use the network—the higher the gas fees.

Neo’s focus is digital assets, so the co-founder said the community is “encouraged” to build fundamental infrastructure for decentralized finance, such as landing and swap protocols.

Oracles are key to DeFi because they connect the real world to blockchains. Da also sees N3 as a good place to build non-fungible tokens (NFTs), due to the decentralized file storage feature.

Da said that because developers were waiting for the network upgrade, they hadn’t been building many dapps on Neo.

Migration: The migration of Neo tokens to the new network will take place using a consortium interoperability protocol Poly Network developed by the team behind Neo.

Exchanges and wallets take care of token migration, the process by which old tokens are converted into new tokens on the new chain, using smart contracts.

Radical changes to the blockchain protocol such as the ones N3 will implement usually take place through a so-called hardfork: The chain splits in two parts, and the change is implemented in one.

Instead of a hardfork, Neo will use an interoperability protocol, a type of chain that enables the transfer of information from one blockchain to another, to create a completely new chain.

“We will be the first blockchain in the world to do a completely new chain through an interoperability protocol,” Da said.

These protocols are at the frontier of blockchain development and crucial for mass adoption: They promise to connect chains that currently exist as islands to create an internet of blockchains.

The N3 migration will test whether Poly Network can be used to create a blockchain from scratch and correctly transfer all the data from the existing chain.

The Ethereum challenges: The Ethereum network has been facing significant challenges in the last few months, and developers are scrambling to find alternatives for their dapps. Gas fees have been hitting record highs as the network becomes congested.

Da Hongfei, Neo’s co-founder (Image credit: Neo) Ethereum “has reached its maximum capacity,” Da said. Transactions per day have plateaued at around 1.2 million to 1.3 million since August, while alternatives like Binance Smart Chain are reaching record-high transaction volumes.

The update to Ethereum 2.0 would likely solve some of these problems, but has been continuously put off. Da thinks we won’t be seeing it for a few years: “It’s difficult to deal with different interest groups,” particularly miners, he said. The upgrade will hurt their bottom line by drastically changing how they are rewarded.

“At the end of the day, Ethereum is one blockhain but everyone needs to maintain a ledger. The capacity growth of the Ethereum ledger will not outpace the growth of demand,” so there is room for many different protocols to grow, Da said.

Government tailwinds: Blockchain’s inclusion in the 2021-2025 Five-Year Plan will “definitely” bring more investment to the technology, Da said.

How Ethereum’s Governance Process Alters ‘The Merge’

The Ethereum developer community is pushing with guns blazing toward proof-of-stake (PoS). But a few speed bumps remain in the way, especially when reflecting on the Ethereum Improvement Proposal (EIP) process.

Last Friday, Ethereum developers began spitballing possible dates for merging the Eth 2.0 client, the Beacon Chain, and the current Ethereum network, Eth 1.x, also known as Ethpow. One idea circulating among developer communities slates “The Merge” for after July’s London hard fork in the subsequent hard fork, Shanghai.

For context, Ethereum has two more hard forks in the immediate future: The Berlin hard fork in April and the London hard fork. Those two hard forks will introduce technical changes to Ethpow, but are unlikely to include any updates necessary to The Merge. Indeed, as Vitalik Buterin spelled out two weeks ago in the “quick merge” write-up, the Beacon Chain and Ethpow could likely be mushed together with few alterations to either chain.

Slow and steady governance

However, that’s not how governance is done on Ethereum. Proposals take as long as three months to six years for inclusion, EIP editor Micah Zoltu said in a private message. Every proposal requires a “champion” to spearhead the proposal and ample amounts of free time to shepherd the idea into production. In fact, given the hype for PoS, Zoltu said the rate of future EIPs being accepted for inclusion will likely decline as everyone focuses on The Merge.

“It’ll probably slow things down tremendously as everyone will be busy with The Merge,” he said. “Everyone will be focused on The Merge and so the rate at which people get feedback on EIPs will slow.”

In terms of similarly large proposals, EIP 1559 may act as a guiding star for implementing the merge. Both proposals have large support among Ethereum developer and user communities, both proposals introduce outsized changes to the Ethereum blockchain and both proposals have had or will have to jump through numerous hurdles before being included in the code bank.

For context, EIP 1559 was first submitted in April 2019 and took about two years of research and analysis before being selected for inclusion. However, enthusiasm for the proposal was whipped into a fury this past summer, particularly with the emergence of decentralized finance (DeFi).

Similar to DeFi rousing support for EIP 1559, resentment and frustration between Ethereum developers and the mining communities is already proving to be a catalyst for The Merge. So, when will PoS happen? Ethereum developers planned on implementing the change by the end of the year. Yet, if history is any guide, one calendar year is perhaps the best approximation.

Pulse check: Our validator ‘Zelda’ signs a second block

Source: CoinDesk Data Dashboard and beaconcha.in (As of 3/16/2021 @ 20:12 UTC)

If you’re new to Valid Points and the topic of Ethereum 2.0 in general, be sure to check out our 101 explainer on Eth 2.0 metrics to get up to speed about terminology used throughout this newsletter.

Zelda signed her second block this past week, boosting her total income earned since being activated on the Eth 2.0 network by 5% to 0.2354 ETH, worth roughly $392 at time of writing.

Eth 2.0 validators can go days, if not weeks, before being assigned the responsibility of proposing and signing off a block. This is because a single validator is randomly assigned this responsibility at every slot, which means Zelda has a one in 110,000 chance of being chosen. The 110,00 figure is the total number of active validators in the system. The higher this number gets, the lower the probability of being assigned a block.

The rarity of these events is part of what makes them special. The other parts include being able to include “graffiti,” which are custom messages you can write onto Eth 2.0’s immutable blockchain ledger, and earning a 60% higher daily reward for validator operations. Each time Zelda was assigned to sign a block, our daily rewards for that day increased from roughly 0.007 ETH to 0.011.

Zelda’s Eth 2.0 validator responsibilities CoinDesk Data Dashboard

CoinDesk data dashboard

Most days, Zelda’s responsibilities are block attestations, of which there are two main types. The more frequent of the two is known as unaggregated attestations. The Ethereum 2.0 network is split in 64 sections, also known as “subnets” or “sub-networks.” Each time a validator makes a block attestation it publishes the associated data on one of these subnets.

At times, Zelda will perform an extra step after publishing her block attestation. She may also be responsible for aggregating attestations communicated by other validators on different subnets into one succinct message. This message gets pushed up into a higher level of Ethereum 2.0’s network on which blocks are ultimately produced, processed and finalized.

While aggregated block attestations are more infrequent than unaggregated ones, they still happen more frequently than block proposals. Since being activated on Eth 2.0, Zelda has made two block proposals, 960 aggregated block attestations and roughly 7,600 unaggregated block attestations.

Number of Unaggregated and Aggregated Block Attestations By Zelda CoinDesk Data Dashboard

As a final note and fun fact about Eth 2.0, this multi-level system depends in large part on Boneh-Lynn-Schacham (BLS) signatures, which is the cryptography that enables messages from Ethereum’s subnets to be aggregated efficiently and securely every few minutes on the network.

Validated takes

DeFi trader tricks Ethereum miners for $250,000 profit (Article, CoinDesk)

Ethermine adds front-running software to help miners offset EIP 1559 revenue losses (Article, CoinDesk)

Financial watchdogs have DeFi in their sights and have altered wording around NFTs (Article, CoinDesk)

Jack Dorsey’s first tweet sells for $2.9 million as an NFT (Video, CoinDesk)

On covering the NFT hype (Op-Ed, CoinDesk)

Factoid of the week

Open comms

Feel free to reply any time and email research@coindesk.com with your thoughts, comments or queries about today’s newsletter. Between reads, chat with us on Twitter.

Valid Points incorporates information and data directly from CoinDesk’s own Eth 2.0 validator node in weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post.

You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which is: