Ethereum network upgrade that will destroy coins could cause ‘explosive growth’ in the ether price, experts say
Ether is the cryptocurrency on the Ethereum network. Photothek/Getty Images
An upgrade to the Ethereum network will change how transactions work and start to destroy coins.
The fall in supply could trigger “explosive growth” in the ether price, one expert said.
Ether has soared by more than 130% in 2021, but the cryptocurrency remains highly volatile.
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A change in the Ethereum network to cut the number of ether tokens in existence could set the stage for “explosive growth” in the world’s second-biggest cryptocurrency, experts said.
On Friday, Ethereum blockchain developers approved a major change to how the network runs, to come into force this summer.
It is set to overhaul the bitcoin rival’s auction system, under which users send tokens to pay for transactions to be completed by miners.
Under the changes, known as EIP 1559, users would send a base transaction fee to the network that would destroy or “burn” the ether tokens, reducing the number outstanding.
Cryptocurrency analysts have said that limiting ether, as the bitcoin system does, will put upward pressure on the price. That combined with the recent enthusiasm for crypto coins means the price could rise sharply, they said.
“What is most exciting to cryptocurrency traders is that now Ethereum will reduce the amount of outstanding ether by destroying some of the tokens every time it’s used to process some transactions,” Edward Moya, the chief market analyst at currency firm Oanda, told Insider.
“Ethereum’s never-ending supply was the least attractive part about it, and now optimism is growing that the world’s most-used blockchain will see a major shift in retail and institutional buying.”
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Justin d’Anethan, a sales manager at the cryptocurrency exchange Equos, told Insider that the proposed changes to the Ethereum network should “not only make the blockchain more eco-friendly” by making transactions more efficient, “but should also make it more scalable.”
“Add to this fewer coins in circulation,” he said, “and you have a recipe for explosive growth.”
However, crypto skeptics have argued that the surge in the prices of the world’s top cryptocurrencies has set them up for sharp falls.
The ether price has risen by more than 130% so far in 2021, taking it to $1,734 on Monday morning, well off a high of more than $2,000 touched in February.
It rose above $1,400 in 2018 before slumping to below $100 later that year.
The changes are set to come into force in July or August as part of a system upgrade known as the “London hard fork.”
Chinese app Meitu buys $40 million worth of bitcoin and ethereum
The interface of the app Meitu is displayed on a mobile phone in Yichang, central China’s Hubei province, Feb 22, 2021.
Meitu, a Chinese company that makes a photo editing app, has purchased bitcoin and ether, becoming the latest firm to buy cryptocurrencies.
The Hong Kong-listed company said on Sunday it bought $22.1 million worth of ether and $17.9 million worth of bitcoin on March 5.
Meitu follows the likes of electric car company Tesla and Square in purchasing bitcoin. But the Chinese appmaker appears to be the first major company to buy ether, a cryptocurrency that works on the ethereum blockchain.
Bitcoin is based on its own blockchain, the technology that underpins it.
Ethereum is a completely different network. It’s an open-source blockchain that allows developers to build apps on top of it. The cryptocurrency ether can be used to pay or interact with services built on top of the ethereum network. These are often called decentralized applications or dApps.
Ethereum wakes up as Chinese institution hops on the crypto bus - CityAM
Crypto at a Glance
Happy Monday! A weekend of good news for cryptocurrency could bode well for the week ahead.
In the US, the Senate passed President Joe Biden’s $1.9 trillion Covid-19 relief package on Saturday. Analysts have speculated that this is a positive development for Bitcoin and other safe haven assets as it will eventually lead to inflation. It could also unleash another wave of demand for crypto if stimulus cheque recipients use the cash to buy cryptocurrencies.
The markets seem to agree with the analysts. The price of Bitcoin swiftly jumped $500 in the immediate aftermath of the news and Bitcoin spent the weekend trading at around the $50,000 level.
It’s currently hovering just below that important psychological mark. The stimulus bill heads back to the House where it will be voted on Tuesday, according to media reports.
The stimulus announcement wasn’t the only piece of good news this weekend. Chinese tech giant Meitu announced that it had purchased $22.1 million worth of Ethereum and $17.9 million worth of Bitcoin. They join a growing list of institutional investors jumping on board the crypto bus, though excitingly they’re the first from China to do so.
Will the move spark a way of copycats from the country? The company also said that it is “evaluating the feasibility of integrating blockchain technologies to its various overseas businesses” including possibly launching Ethereum-based apps.
Ethereum generally seems to have woken from its slumber this weekend, soaring back to over $1,700 again on Sunday. Will it manage to maintain the momentum for the rest of the week? Elsewhere, Uniswap has cracked the top 10 for the first time after hitting a new all-time high of more than $34 – Bitcoin Cash making way for the upstart cryptocurrency and dropping out of the top 10. The fall marks a steady decline for the cryptocurrency, which has risen steadily in price but been overtaken by other rivals. Will Uniswap manage to keep its place in the top 10 now?
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In the Markets
Name Price Price Change (24h) Price Change (7 days) Bitcoin (BTC) $49,531.13 +0.27% +7.19% Ethereum (ETH) $1,681.26 +0.81% +17.01% XRP (Ripple) $0.4624 -0.21% +9.86% Monero (XMR) $205.48 +0.23% -4.03% Polkadot (DOT) $33.69 -0.77% +0.36% Algorand (ALGO) $1.08 -0.89% +5.29% Cardano (ADA) $1.12 -0.30% -11.33% Chainlink (LINK) $28.61 +0.14% +13.82% Aave (AAVE) $393.76 +1.28% +7.39% UniSwap (UNI) $32.94 +7.34% +44.21% Celsius (CEL) $5.19 +11.75% +10.78% Binance Coin (BNB) $232.09 +2.19% +4.63% Crypto market cap $1,540,175,539,967 MVIS CryptoCompare Digital Assets 100 Large-Cap Index -1.99 MVIS CryptoCompare Digital Assets 100 Small-Cap Index -0.79 MVIS CryptoCompare Ethereum VWAP Close Index +1.69 Prices and data as of [08:30, 8/03/2021] Source: CryptoCompare.com, MVIS
The Bitcoin Economy
*Definitions and insights can be found at https://bytetree.com/insights/
What Bitcoin did yesterday
We closed yesterday, March 7 2021, at a price of $51,206.69 – up from $48,912.38 the day before. That’s the highest daily close since 22 February.
The daily high yesterday was $51,384.37 and the daily low was $48,918.68.
This time last year, the price of bitcoin closed the day at $8,909.95. In 2019, it was $3,911.48.
As of today, buying Bitcoin has been profitable for…
99.9% of all days since 2013-04-28.
Bitcoin market capitalisation
Bitcoin’s market capitalisation is $923,187,647,227 at time of writing. For context, the total market cap of gold is $10.772 trillion.
Bitcoin volume
The volume traded over the last 24 hours was $45,890,393,684. High volumes can indicate that a significant price movement has stronger support and is more likely to be sustained.
Volatility
The price volatility of Bitcoin over the last 30 days was 79.63%.
Fear and Greed Index
Market sentiment is still in Extreme Greed at 81.
Bitcoin’s market dominance
Bitcoin’s market dominance is 61.01. Its lowest ever recorded dominance was 37.09 on January 8 2018.
Relative Strength Index (RSI)
The daily RSI is 54.53. Values of 70 or above indicate that an asset is becoming overbought and may be primed for a trend reversal or experience a correction in price – an RSI reading of 30 or below indicates an oversold or undervalued condition.
Convince your Nan: Soundbite of the day
“Blockchain technology has the potential to disrupt both existing financial and technology industries, similar to the manner in which mobile internet has disrupted the PC internet and many other offline industries […] The Board believes cryptocurrencies have ample room for appreciation in value and by allocating part of its treasury in cryptocurrencies can also serve as a diversification to holding cash (which is subject to depreciation pressure due to aggressive increases in money supply by central banks globally) in treasury management.”
Chinese photo editing app, Meitu
What they said yesterday
Exciting times for ADA…
RATS made a block! https://t.co/AZVdrtfnfd I made my first block!!! — Charles Hoskinson (@IOHK_Charles) March 7, 2021
Saylor gets existential…
#Bitcoin’s only something you need in case you don’t die tomorrow. — Michael Saylor (@michael_saylor) March 7, 2021
Bitcoin is life…
My wife is going through a box of old things. I see a paper with a seed phrase on it. I grab it and try and figure out what wallet this could be…..wife grabs it back, “those are your daughters first words, it’s not bitcoin” pic.twitter.com/EIvZVtj9Lw — Jonathan Caras (@madcapslaugh) March 7, 2021
Growing fast…
Crypto AM Editor Writes
Rangers become latest club to attract crypto sponsorship and fan token…
Bitcoin crashes for a second time in a week…
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Crypto AM: Recommended Events
CC Forum
Global Investment in Sustainable Development
March 31 to April 1 2021 – Dubai
Global Technology Governance Summit
April 6 to 7 2021 – Tokyo
https://www.weforum.org/events/global-technology-governance-summit-2021
Cautionary Notes
It’s definitely tempting to get swept up in the excitement, but please heed these words of caution: Do your own research, only invest what you can afford, and make good decisions. The indicators contained in this article will hopefully help in this. Remember though, the content of this article is for information purposes only and is not investment advice or any form of recommendation or invitation. City AM, Crypto AM and Luno always advise you to obtain your own independent financial advice before investing or trading in cryptocurrency.
All information is correct as of 08:30am GMT.