After recovering by roughly 55% in the previous 2 weeks, Ethereum made a 0.06 retracement on 3rd August.
Within the past 2 months, Ethereum has tested the $1730 support zone twice. This shows that the level seems to have held as support for the downtrend that started on 12th May. This downtrend happened after the price hit the $4,360 all-time peak. With the anticipation of the London upgrade that happened yesterday, both traders and investors have pushed the coin’s price to the $2845 short-term resistance level. The chart below shows this price action;
image from meta trader 5
While both traders and investors have been buying the coin in anticipation of this major update, we are all curious to see what happens now that the update has been integrated.
The London Upgrade
The Ethereum network has been going through several phases of upgrades to improve its speed and reduce transaction costs. Each upgrade is meant to solve an existing problem and make the Ether blockchain more efficient. Some of the previous upgrades include the Berlin hard fork that happened four months ago, the early 2020 Muir Glacier hard fork, and the 2019 Istanbul.
Yesterday’s upgrade, popularly known as the London hard fork, is meant to improve the network’s fees management. EIP-1559 is one of the 5 EIPs in this upgrade. EIP-1559 is meant to solve the fluctuations in Ethereum’s transaction costs. This protocol will change the traditional auction system. In this auction system, those making transactions are required to bid for the miners to process their transactions. Due to this, prices spike when there are many transactions in the system.
Based on the EIP-1559, miners will now receive only a tip of the transaction fee while the rest will be burnt. In addition, the miners will also get the block rewards. Previously, the miners have been getting the entire transaction fee and the block rewards. The chart below shows the old structure against the new one;
In conclusion, while traders and investors have been buying ETH in anticipation of the London upgrade that happened yesterday, it is yet to be seen whether the implementation of this upgrade will inspire a bullish trend for the coin.
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