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New Ethereum Rally Might Trigger – Watch These Levels

New Ethereum Rally

July 5, 2020 | 

1567 Views | 

JOHN K MWANIKI | 

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The Ethereum's value has been evolving in recent times. The coin has been trading above the support zones of $205, moving well into the resistance levels of $230.

The coin has already found the support levels, which are critical to the coin surpassing resistance. Like any other crypto, failure to push through comes with some free fall, while getting past the resistance comes with even more rise. 

Even though the prices are already high, the expected Ethereum 2.0 release will impact the value of the coin even further.

How Ethereum 2.0 Can Trigger the Ethereum Rally

Ethereum is at the moment trading at some of the highest levels. However, the launch of the Ethereum 2.0 is expected to boost the uptake of the coin to some unprecedented levels.

The launch slated for July would change the validation of transactions from proof-of-work to proof-of-stake.

Instead of competing against each other, the validation will allow those with higher assets to take charge. Improved validation systems come with faster transaction speeds; thus, most people will be looking to use it.

Experts have been looking into the possible effects of a change in the validation, with most predicting an accompanying bull wave. For example, Adam Cochran, a partner at MetaCartel Ventures, believes the move is likely to create an Ethereum uptake wave.

Explaining in a tweet thread, he foresaw an increase like never before. The stream will then lead to a price shift. 

Increase in Demand for Ethereum Affecting Prices

The other reason for a possible shift in the value of the Ethereum is the increased uptake. Most of the crypto investors are already monitoring the coins' position before the launch of ETH 2.0. They are looking to take up the currency due to its improved features.

The supply and demand of cryptos are similar to any other market. The more the need for the coin arises, the lesser the amount leading to higher prices.

Even though Ethereum already comes with assured returns on investments of around 3% to 5% per year, the increased demand seeks to improve the numbers further.

With most investors looking for guaranteed returns, the prospects of acquiring Ethereum will go hire, pushing its prices even more.

Ethereum also seeks to control the issuance, which would likely affect supply. At the moment, the issuance of Ethereum is capped at 4.3 million per year. However, after the ETH 2.0, Ethereum seeks to reduce the cap to 2 million in a year.

The reduction of supply with an increasing demand for top investors looking to gain the results is a positive catalyst for the price rallies.

The other reason for the possible bullish run of Ethereum is the fear of missing out by most clients. Most investors would not want to commit a similar mistake they did with Bitcoin. Some months in 2018 saw Bitcoin trade for as low as $1. 

Fast forward to present when BTC is trading at $10,000, most investors feel that they might have lost an opportunity of a lifetime. It is not any other day that investment comes with a return 10, 000 times the investments. Most investors would be looking to become part of the new wave of Ethereum's price boost.

Other than the increased demand and reduced issuance caps, Ethereum also looks to control supply by burning of the base coin within regular intervals.

For a start, it seeks to burn around 10,000 ETH per year. Even though these seem ineligible compared to the millions of the ETH in supply, it will count for something in the long run.

With most coins held by the traders, eliminating even a slight portion would likely reduce the quantity, thus higher costs.

Increasing Use Cases of Ethereum to Bolster Supply 

The main reason for the rollout of the Ethereum 2.0 is to help solve the current concerns in the blockchain system. Other than increasing the speeds of transactions through a change of validation, it also seeks to help alleviate the scalability concerns of Ethereum.

Ethereum 2.0 also seeks to improve accessibility. Unlike the current set up that favours mining companies with powerful machines for validation, the individuals mean that more people would likely become a party to the coin, thus improving demand.

Possible Challenges with the Ethereum Rally

Even though it might seem all rosy that the only remaining thing for a rise in the value of Ethereum is the release of ETH 2.0, there are a few concerns to look into. The first significant issue is the lack of trust in the new platform by existing traders.

Traders who are already making a killing on the existing model would not be so receptive to uncertainty.

Competition from the other existing cryptos is another concern. Already Bitcoin is established and looks not to relinquish its position as the world leader. Several other altcoins and Stable coins are also looking to join the frenzy.

It means ETH 2.0 must provide certain benefits to become the real market changer.

Bottom Line

After trading on some of the highest levels in recent times, Ethereum is ready to beat the resistance levels of $235. Such gains are likely to be bolstered even further with the release of Ethereum 2.0.

However, the changes by ETH 2.0 are not instant; the company has a multi-year rollout plan. With the coin release almost, traders should gear up to be part of one of the most exciting coin price shifts ever. 

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