Ethereum London Hard Fork Went Live, Here’s What Analysts Are Saying
The London hard fork went live almost on schedule at 12:33 pm UTC on Thursday at block height 12,965,000, ushering in the Ethereum Improvement Proposal (EIP) 1559.
Notably, the hard fork has also rolled out five new ETH Improvement Proposals (EIPs). However, EIPs 1559, 3554, 3529, 3198, 3541 are code upgrades that focus on improving the user experience of Ethereum’s network.
Moreover, this upgrade has got more media attention compared to other upgrades. Furthermore, the significant growth of the crypto market has helped bring Ethereum to this level. Also, investors are interested in the huge potential the new EIPs could have on the whole network.
Under EIP-1559, each transaction on Ethereum will involve burning the base fee, which automatically decreases the Ether (ETH) circulating supply. Several exchanges, including Binance, announced a temporary pause to deposit and withdrawals on the Ethereum network due to the London hard fork.
$ETH network deposits and withdrawals have been temporarily paused on #Binance for the London hard fork.
Moreover, this upgrade has got more media attention compared to other upgrades. Furthermore, the significant growth of the crypto market has helped bring Ethereum to this level. Also, investors are interested in the huge potential the new EIPs could have on the whole network.
Some proponents of the upgrade say it will catapult Ether to becoming a deflationary asset, as each transaction will trigger a portion of the total coin supply to be removed from circulation forever.
Ethereum co-founder and ConsenSys founder Joseph Lubin described the London upgrade as a part of a journey toward making Ether become “ultrasound money.”
The London upgrade and the subsequent activation of EIP-1559 is a mile marker of sorts in the transition to Ethereum 2.0, which will move the network from a proof-of-work consensus to a proof-of-stake consensus.
After the London upgrade engineers block elasticity and overhauls the transaction fee market, the Shanghai hard fork scheduled to happen later in the year will be the next focus point on the agenda.
Ether clocked an all-time high above $4,200 back in mid-May right before the crypto price crash that saw Bitcoin (BTC) lose about 50% and altcoins declining by over 70% on average.
While the Ethereum hard fork is ongoing, Bitstamp disabled deposits and withdrawals for ETH and ERC20 tokens. Following this, the crypto exchange clarified its action. Bitstamp said that this measure ensures the safety of users’ funds during the fork as the ETH network will be too unstable to support transactions.
We have disabled deposits and withdrawals for ETH and ERC20 tokens due to the Ethereum hard fork. We'll keep you updated.
Yesterday, Binance and OKEx exchanges also said that they would suspend all ETH transactions. This includes deposits and withdrawals.
Furthermore, with this upgrade the ETH price is expected to skyrocket, and so far the price has gone up, but not massively. According to CoinMarketCap, the ETH price is at $2,770, with 2.6% price increase in a daily chart, and a 24-hour trading volume of $31,152,250,242, at the time of writing.
Here’s What Crypto Analysts Are Saying About the Ethereum Hard Fork
Martin Gaspar, research analyst at CrossTower:
The apparent success of the upgrade is getting priced in.
“The notion of ethereum becoming a deflationary cryptocurrency in the future is now tangible, and the effects on ethereum’s valuation could be profound.”
Alex Svanevik, co-founder & CEO at Nansen:
It will take a while, possibly even weeks, to see any real impact from the upgrade.
Currently, he is focusing on a metric that looks at the percentage of EIP 1559 transactions, which is currently very low.
“As wallets, bots, etc. start making use of the EIP 1559 features, we will know more about how this upgrade affects Ethereum long term.”
Denis Vinokourov, head of research at Synergia Capital:
“Overall, the reaction is more or less as expected. It is very rarely that ethereum benefits from any immediate upside following such network upgrades, although a bias tends to materialize over time.”
These occasions are typically well documented heading into the event, given the transparent discussions on various forums and conferences, he said.
That’s “unlike, for example, the [Federal Reserve] meeting, where slight nuances with regards to language used may have a more pronounced impact on reaction by different asset classes,” Vinokourov said.
Laurent Kssis, managing director of exchange-traded products at 21Shares AG:
Kssis sees a possibility of a short-term correction as the network stabilizes, before resuming an upward trend.
He said he can’t see a definite trend in the short term, but a relative value trade could be implemented between ether and bitcoin.
“With [non-fungible tokens] in full swing, we see a consolidation as demand remains strong in the [decentralized finance] segment.”
Alexandre Lores, analyst at Quantum Economics:
Increased scarcity of ether will bring longer-term value to supply/demand factors.
“Short term, this is another reason to be bullish,” Lores said.
Lores also said that bitcoin is looking bullish on the 15-minute and one-hour candle charts.
“I believe this is anther supporting factor in the ETH rally; however, in this case it does not appear to be the dominant factor,” he said.
Normally, bitcoin is the main influencing factor, but in this instance it is merely adding fuel to the “bullish fire,” according to Lores.
Tom Salter, digital asset analyst at ByteTree:
“This is the most extensive upgrade to Ethereum in years. Part of me thinks Ethereum maximalists did not expect it to be implemented. Clearly, hype has a part to play.”
“Bear in mind this rise has taken [ETH] to a 30-day relative high against BTC. That alone will give this breakaway legs.”
In terms of what is next, Salter hopes that several debates will be settled in the Ethereum community: whether EIP 1559 will give Ethereum a deflationary supply, and whether fee tips will be enough for “greedy miners.”
Rick Bensignor, president of Bensignor Investment Strategies:
Bensignor attributes ether’s rise in price after the London upgrade to a combination of the theoretical bullishness that comes from the “hard fork” (i.e., lower transaction costs along with slightly reduced supply).
He also said the uptick is because crypto traders tend to trade the news of the day, and “it’s not a developed enough market to really know what the long-term fundamentals truly are,” said Bensignor.
