Can Ether EIP1559 Ignite the Crypto Market in July?

Is the bull market over?

Can Ether EIP1559 Ignite the Crypto Market in July?

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

Indicators such as bitcoin mining difficulty set to see a trifecta of downgrades, the longest since the bear market bottomed out in 2018; institutional holdings of bitcoin base volume hitting a four-month low; and the 120-day average losing ground all suggest a bear market has arrived. But there are also a number of signs that the bull market is not over: for example, the total value of bitcoin transferred by miners from mining pools to exchanges is continuing to fall; spot exchange inflows have fallen to their lowest level in the past month, and so on.

Are the successive negative declines a normal bull market pullback or the start of a bear market? As the saying goes, “Five is poor, six is bad, and seven is over.” The upcoming July is crucial to the direction of bulls and bears, and one of the decisive factors may be Ether.

Although only six years old since its birth, Ether has already started to become a mainstream cryptocurrency second only to BTC in terms of total market capitalization. While BTC still holds the lion’s share of total crypto market cap, Ether has cemented its leadership as a utility blockchain, and today Ether is the public chain with the largest number of DAPPs.

With this dominance, however, comes many challenges. The first and foremost is transaction time; Bitcoin can process 3 to 5 transactions per second, and Ether transactions will be a little faster, but as adoption increases, a drop in speed is unavoidable.

The Gas fee paid per transaction (i.e., the fee submitted to miners to include the transaction in the block) also spikes when transaction volume rises. At one point this January, transaction fees incurred by network transfers were as high as $500; in May, ethereum mining revenues reached $2.35 billion and have remained high.

While this is good for miners, the high Gas fees have forced many entrepreneurial projects to switch to other chains such as Solana and Polka, and the high cost of transfers is clearly becoming a big problem for new projects.

The core developers of Etherpad have proposed a solution to this problem, namely EIP1559. EIP-1559, the Etherpad Improvement Proposal 1559, is expected to land in July and is designed, among other things, to reduce the cost of transferring money in Etherpad and increase the scarcity of ETH. Blockchain data analytics firm Messari research analyst Wilson Withum has said that the net annual issuance of ETH will drop significantly during the Ether Phase 1.5 to Phase 2.0 merger.

Because of this, some industry insiders believe that EIP1559 will ignite the sluggish crypto market. eIP1559 will lead to a drop in ETH production, and the reduced supply will allow the price of ETH to start soaring. Based on Ether’s current status as the second largest global market cap and its strong appeal, EIP1559 may even rewrite the crypto market where various indicators have turned bearish.

Posted by:CoinYuppie,Reprinted with attribution to:
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