Thursday, December 9

Ethereum’s performance has outperformed other cryptocurrencies, during this last week

Ethereum, listed as the second largest cryptocurrency on the market, has risen in price by around 12%, since October 19. While its rival, Bitcoin, has suffered a fall in its price of about 3%. Likewise, Ethereum has also outperformed alternative digital tokens, such as Binance Coin and Cardano, over the past week.

This rise in the price of Ethereum has come before a major update scheduled for Wednesday, where the Ethereum network is anticipated to become faster and more scalable. This could lead to lower transaction fees for network users.

Likewise, Ethereum has increased its price by 1,000% during the last year, surpassing the 380% increase in the price of Bitcoin. This significant increase is due to the popularity that the ETH network has gained for various digital applications, such as decentralized finance (DeFi) and non-fungible tokens (NFT).

At the time of writing this article, the Ethereum price stands at $ 4,192.02.  Source: CoinMarketCap
At the time of writing this article, the Ethereum price stands at $ 4,192.02. Source: CoinMarketCap

Investors are also using the Ethereum market to position themselves in it. This, in light of a possible announcement of an Ethereum exchange-traded fund (ETF) on the US stock market, according to cryptocurrency liquidity provider B2C2, in a recent report.

“The SEC has discouraged ETF providers from launching new Ethereum-linked digital products, but high demand and competition suggest its inevitability.” Said Bloomberg strategist Mike McGlone, in a report Monday.

The promises of Ethereum 2.0

In August, Ethereum launched its much-heralded update called “London.” This fork or in English “hard fork” represents the first step on the way to the Ethereum 2.0 network. This update implemented multiple major enhancements to the ETH network, preparing it for the transition. The ‘London’ update came as Ethereum continued to struggle under the weight of recent booms in the DeFi markets and non-fungible tokens (NFTs).

One of the most notable features of the “London” update is the EIP-1559. Which aims to improve inflation rates in the network, as well as stabilize transaction rates. For this, a system was implemented in which the commissions of the transactions carried out are burned instead of being paid to the miners directly. However, miners continue to receive rewards for each block mined. And users can voluntarily add “tips” or tips for miners for transactions and thus incentivize the priority of their execution.

Unlike Bitcoin, Ethereum does not have a cap on ETH, so its global supply increases without limits. This has caused many investors to worry about long-term inflation, due to this unrestricted growth. The EIP-1559 does not make the Ethereum have a deflationary behavior, however it controls the speed of expansion of the offer, creating a balance in the market.