The global encryption market experienced a thrilling scene on the 22nd of this month: BTC fell below the $30,000 mark, and the encryption market value staged a collective plunge. Although the price of BTC then rebounded back above $30,000, many indicators have shown signs of turning bearish in the crypto market.

For example, the difficulty of Bitcoin mining will usher in three consecutive reductions, which is the longest record since the bottom of the bear market in 2018; the base amount of Bitcoin held by institutions has hit a four-month low; the 120-day moving average has fallen and other indicators show that the bear market has arrived . But there are also many signs that the bull market is not over yet: For example, the total value of Bitcoin transferred from mining pools to exchanges by miners continues to decline; the inflow of spot exchanges has dropped to the lowest level in the past month, etc.

Is the continuous negative decline a normal bull market callback or the start of a bear market? As the saying goes: "Five poor, six absolutely, seven turn over." The upcoming July is crucial to the direction of bulls and bears, and the decisive factor may be Ethereum.

Although it is only six years old since its birth, Ethereum has become the mainstream cryptocurrency with a total market capitalization second only to BTC. Although BTC still occupies the bulk of the total market value of encryption, Ethereum has consolidated its leading position as a practical blockchain, and now Ethereum has become the public chain with the largest number of DAPPs.

But with this dominance comes many challenges. The first thing to bear the brunt is the transaction time. Bitcoin can process 3 to 5 transactions per second, and the transaction speed of Ethereum will be faster, but as the adoption increases, the speed will inevitably decline.

The gas fee paid per transaction (that is, the fee submitted to the miner to include the transaction in the block) also spikes when the transaction volume rises. In January of this year, the transaction fee generated by network transfer was once as high as 500 US dollars; in May, the mining revenue of Ethereum reached 2.35 billion US dollars, and it has remained high.

Although this is beneficial to miners, the high Gas fee forces many entrepreneurial projects to switch to other chains such as Solana, Polkadot, etc. The high transfer cost is obviously a big problem for new projects.

In this regard, the core developers of Ethereum proposed a solution, namely EIP1559. EIP-1559, the Ethereum Improvement Proposal 1559, is expected to land in July. One of its design purposes is to reduce the cost of transferring money in Ethereum and increase the scarcity of ETH. Wilson Withum, a research analyst at Messari, a blockchain data analysis company, once said that during the merger between Ethereum 1.5 and 2.0, the net annual issuance of ETH will drop significantly.

Because of this, some insiders believe that EIP1559 will ignite the flagging encryption market. EIP1559 will cause the production of ETH to decrease, and the reduction in supply will cause the price of ETH to start to soar. Based on the status quo of the second largest global market value of Ethereum and its strong appeal, EIP1559 may even rewrite the encryption market where various indicators are turning bearish.