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In the last few weeks, Ethereum has lost over 50% from its peak valuation of over $4000 to trade at lows of $1900. This bear ride seems to have lost momentum as the price is currently making upward movements. The price drop was not unique to Ethereum as the experience was similar across the entire crypto market. However, the trend seems to be reversing as major cryptocurrencies have started recording upward movement. One of the Ethereum price drivers is the expected EIP-1559 update. The below chart indicates the price changes of the Ethereum cryptocurrency for the last month.
From the chart, the downward movement has started reversing. Most analysts are interpreting this as the first step towards price recovery.
The currency could be getting ready for a long and sustained bull run. Various factors could influence the price including;
EIP (Ethereum Improvement Proposal)-1559
Among the reasons for the price jump is the anticipated EIP-1559 blockchain update. The update is expected to change the transaction fee model currently in place when conducting Ethereum transactions.
The current fee structure is complicated and slow. These challenges inhibit Ethereum from reaching its peak potential. Every transaction on the Ethereum network attracts a fee known as “gas fee”.
The fee is rewarded to the blockchain actors in form of Ether. If the update is successful, it will make Ethereum deflationary crypto in the long term through periodic burning.
These probable outcomes have made Ethereum more lucrative to buy into. Through deflation, there will be fewer coins in circulation resulting in higher future prices.
Ethereum is one of the most diversified blockchain networks. It has positioned itself as the go-to network for blockchain solutions.
Some of its key uses include the creation of a cryptocurrency (Ether), Non-Fungible Token development, and providing a platform for Decentralized Finance (DeFI).
These functionalities give Ethereum more value proposition that will boost its value into the future. Some of them are already in use.
An example is the NFT platform based on the Ethereum proof of ownership concept. The uptake of NFTs is gaining momentum. This acceptability is a key factor in driving Ethereum’s price growth.
Several cryptocurrencies have been developed on Ethereum’s blockchain. Examples include Tether, USDC, and Shiba Inu. These stable coins have been developed on Ethereum’s blockchain.
By offering a plug-and-play blockchain platform, Ethereum has positioned itself as a market leader in supporting cryptocurrencies development. This is a strength the competitors lack and could be a key driver in its price recovery momentum.
Ethereum price is currently gaining upward momentum. The halving that happened in the last few days has attracted a lot of buyers into cryptocurrency. The recent price recovery indicates buyers are starting to get into the market.
EIP-1559 concept is already causing market excitement. The update is yet to be implemented however, the market is responding. If successfully implemented, EIP-1559 could inject the much-needed strength in driving Ethereum’s price higher.
Change of the fee structure is a boost to developers and miners as rewarding will be fair and adequate. This will assist accelerate the innovation and safety of the assets in the blockchain.