The rebound is stronger than BTC, what other stories does Ethereum have to tell?
Author: Kyle; Editor: Wen Dao
Author: Kyle; Editor: Wen Dao
A week has passed since "Black Thursday", and the panic in the crypto asset market has eased.
Since May 24, mainstream assets such as BTC and ETH started to rebound. BTC rose from $31,083 to a maximum of $40,855 during the rebound phase, an increase of 31.4%; while ETH performed well, rising from a low of $1,728 to a maximum of $2,909, a maximum increase of 68.34%.
In fact, except that ETH underperformed BTC during the crash, ETH has consistently outperformed BTC since April. According to Aicoin's data, the ETH/BTC trading pair opened at 0.031 BTC on April 1. On May 15, the price of ETH rose to 0.082 BTC. In one and a half months, ETH rose by 164.5% compared to BTC.
When the current Bitcoin mining is cleared by China's supervision due to energy consumption, ETH, which has transformed into PoS, has become another way out for encrypted assets. According to the plan, when ETH 2.0 lands, the performance of the entire network will be greatly improved, and the speed of ecological development may reach another level.
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The ETH to BTC exchange rate rose 30% during the market rebound phase
After experiencing the "5.19" plunge, the encrypted asset market has entered a stage of shock consolidation.
From the perspective of market trends, mainstream assets such as BTC and ETH bottomed out on May 23, and then went out of a short-term rebound trend. Since the 24th, BTC has risen day after day from a low of $31,083 to a peak of $40,855, with a maximum increase of 31.4%. At 2 p.m. on the 27th, BTC was quoted at $38,132, a 22.6% increase from the low point.
Compared with BTC, ETH's performance in the rebound stage is stronger. It rose from a low of $1,728 to $2,909, with a maximum increase of 68.34%. Currently, ETH is floating around $2,720, with an increase of 57.4% at a lower point.
It can be seen from the data that in this round of bottoming out and rebounding market, the increase of ETH is more than twice that of BTC, and the rebound momentum is more rapid. Of course, a factor that cannot be ignored is that during the sharp drop, ETH fell more than BTC. Based on the opening price on May 19, BTC opened at $42,974 on that day, the lowest fell to $29,000, and the largest drop reached 32.5%. Opening at $3345, the lowest fell to $1728, and the biggest drop reached 48.34%.
In fact, if you zoom in on the cycle, ETH has been performing better than BTC since April this year. According to Aicoin’s data, the opening price of the ETH/BTC trading pair on April 1 was 0.031 BTC, that is, 1 ETH was equivalent to 0.031 BTC at that time. Until May 15, the exchange rate of ETH against BTC continued to rise, with the highest price reaching 0.082 BTC, an increase of 164.5% in one and a half months.
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ETH/BTC prices have continued to rise since April
However, during the market decline period from May 15th to 23rd, the price of ETH/BTC fell back to a minimum of 0.055BTC. In the rebound stage, ETH/BTC rose rapidly again, and the current quotation is 0.072BTC, which means that during the market rebound period, the ETH/BTC exchange rate rose by 30%.
If the time period is extended, according to data from Feixiaohao on May 27, ETH has risen by 1245.90% in the past year, while BTC has only risen by 334.04% in the same period.
In the current bull market cycle, ETH has performed better than BTC. Jiang Zhuoer, the founder of LeBit Mining Pool, even predicted that the total market value of ETH in this round of bull market will briefly exceed that of BTC, and the highest price may reach 20,000 US dollars. In the next cycle, the total market value of ETH will permanently exceed the total market value of BTC. The reason he gave was that ETH is equivalent to the Internet, and various projects on it are like technology companies, BTC can be compared to gold, and the total market value of the Internet is higher than gold.
So, why is the market still optimistic about ETH, and what are its potential expectations?
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'London Upgrade' Deflation Proposal Supports Rising Expectations
According to the data of Okey Cloud Chain, the current total lock-up value on the ETH chain is 76.4 billion U.S. dollars, which has dropped from the high point of 110.8 billion U.S. dollars before the crash, but a year ago, this figure was only 1.04 billion U.S. dollars . With the expansion of the DeFi market, the ETH ecosystem has made great progress, and the total lock-up value has increased by 73.46 times in one year.
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The current total lock-up value on the ETH chain is 76.4 billion US dollars
DeFi has allowed the ETH blockchain network to return to its original value, and as one of the "shovels" for on-chain handling fees, collateral in lending agreements, and liquidity mining, the price of ETH has also risen with the development of DeFi . From this point of view, ETH trend is stronger than BTC, which does not seem abrupt.
In addition, the most eye-catching thing is the upcoming London upgrade of ETH in July. The London upgrade is a planned hard fork upgrade of Ethereum. It is highly anticipated because the EIP-1559 proposal, which has been discussed for a long time, may be officially implemented in this upgrade.
The EIP-1559 proposal was proposed by Ethereum founder Vitalik in 2018. Its main goals include avoiding economic abstraction, flexible block design, permanent block subsidies, and establishing an algorithmic fee model. Simply put, the proposal aims to improve the "elasticity" of blocks to reduce network congestion; at the same time, it replaces the current bid-priority packaging model with an algorithmic fee model to reduce gas fees.
In the algorithmic fee model, EIP-1559 compatible wallets will automatically set transfer fees. This fee consists of a base fee and a tip, where the base fee will be burned and the tip will be used as a miner reward.
In April of this year, EthHub co-founder Anthony Sassano once again clarified the meaning of "destruction". He said that once EIP-1559 is implemented, every transaction on Ethereum will burn ETH. Every liquidation, every ETH transfer, every second-layer proof, every DEX transaction, even every rug pull, no matter what the transaction is, ETH will be burned. This means that ETH will enter an era of relative deflation, reducing the inflation rate under the general mechanism of unlimited supply.
Some investors have calculated that after the implementation of Ethereum EIP-1559, 2.2 million ETH will be destroyed every year, which will reduce the inflation rate of ETH from 4.2% to 2.3%, which is about halved. Arthur Hayes, the former CEO of BitMEX, believes that the EIP-1559 upgrade and the upcoming London hard fork package will tighten the supply of ETH, which is the main reason for the current bull market.
Previously, it was clear in the Ethereum core developer meeting that the London upgrade on July 14 will implement EIP-1559. At present, the proposal has begun to be tested and deployed on the test network.
In addition to the expectations brought about by deflation, Ethereum investors are also paying close attention to the ETH 2.0 upgrade, which is an important step for ETH to shift from PoW consensus to PoS. When the current encrypted asset mining industry is suppressed by Chinese regulatory policies, PoS seems to be a wiser choice. According to the plan, when ETH 2.0 lands, the performance of the entire network will be greatly improved, and the speed of ETH ecological development will also be greatly accelerated by then.
According to the data of Okey Cloud Chain, the current ETH 2.0 deposit contract address has received more than 5.1 million ETH pledges, and the current circulation of ETH is about 115 million, which means that more than 4% of ETH is locked.
