- Around 75% of Etheruem nodes are prepared for the London hard fork.
- The highly anticipated upgrade is expected to occur on block 12,965,000 scheduled for August 5, following a slight delay.
- Ethereum price managed to slice above $2,700 for the first time since early June.
Roughly 75% of Ethereum nodes are ready for the upcoming upgrade, the London hard fork. The ETH London upgrade is expected to take place on block 12,965,000, scheduled to occur on August 5.
Ether would not become a deflationary asset by default
One of the most highly anticipated events in Ethereum history, the London hard fork is expected to go live soon, as 75% of ETH nodes are fully prepared for the occasion. Node operators must update the client version that they run in order to be compatible with the upgrade.
Ethereum London ready client distribution
The London hard fork will introduce five Ethereum Improvement Proposals (EIPs), including EIP-1559, an eagerly awaited proposal that will present a base-fee burning mechanism.
EIP-1559 changes the way transactions get processed on the Ethereum blockchain, by indicating transparent pricing on the base transaction fee that is paid to miners in Ether. Part of the tokens will be burned and taken permanently out of the ETH circulating supply.
The annual supply change of Ether could be reduced by 1.4%, and around 6,000 ETH would be burned per day. As transactions occur on the Ethereum network, ETH could become increasingly deflationary.
However, investment banking giant Goldman Sachs believes that the London hard fork would not make ETH a deflationary asset by default.
The New York-headquartered firm believes that the upgrade will decrease the Ether inflation rate, and the base fee burnt will need to offset the issuance rate of Ethereum for the second-largest cryptocurrency by market capitalization to become deflationary.
Goldman Sachs further pointed out that an increase in Ethereum network activity could mean more ETH is burned, and there would be less Ether to be resold in the market, potentially reducing miner selling pressure.
There remains doubt on how the community will respond following the Ethereum London upgrade. Miners could see a huge impact from EIP-1559, and according to Compass Mining, ETH miners could see their revenue dip by 20% to 30% due to the fact that a part of their fees will be burned.
Ethereum price climbs above $2,700 and anticipates bigger moves
Ethereum price has seen a 12% surge on August 4, ahead of the London hard fork, closing above a critical resistance level.
The recent spike could also be attributed to the surge in Ethereum social volume, according to Santiment.
Ethereum social volume
Ethereum price managed to slice above the 100-day Simple Moving Average (SMA), recording a reaction high at $2,772. Currently, the 78.6% Fibonacci extension level at $2,710 continues to act as stiff resistance for ETH.
Should Ethereum price be able to close above $2,710, this could open up the possibility of a rally toward $2,994, the May 20 high. Bigger aspirations and bullish sentiment following the upgrade could incentivize ETH to tag the 127.2% Fibonacci extension level at $3,339 in the longer term.
ETH/USDT daily chart
However, investors should pay attention to the Relative Strength Index (RSI), which suggests that Ethereum price was slightly oversold on August 2 and August 4.
If Ethereum fails to galvanize investors’ enthusiasm following the London hard fork, ETH should discover meaningful support at the 61.8% Fibonacci extension level at $2,493, and the second line of defense at the 38.2% Fibonacci extension level at $2,187, coinciding with the 50-day and the 200-day SMAs.
Further selling pressure could see Ethereum price fall into the demand barrier, which extends from the 23.6% Fibonacci extension level at $1,999 to the 38.2% Fibonacci extension level at $2,187.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.