Ethereum Technical Analysis Report | 11th-May-2022

Will revamped ethereum maintain its position? An analysis

Launched in July 2015, Ethereum has grown significantly in value over the past few years due to its wide range of decentralised application (DApp) offerings. The exponential rise of decentralised finance (DeFi) and non-fungible tokens (NFTs) has sealed its success as the most widespread blockchain network. In addition, its native currency Ether (ETH) has solidly maintained its second position by market cap and daily volume in the crypto space. 

In traditional finance, the intrinsic value represents the actual or perceived value of an asset or currency. It should not be confused with market price, as assets can be over or undervalued. 

Fiat currencies like the US Dollar or the Euro have an intrinsic value as they are issued by monetary authorities like central banks and are mainly used in their economy. What is the intrinsic value of crypto? Crypto like Bitcoin (BTC) or ETH is not backed by government central banks, but their intrinsic value could be defined by their scarcity, use cases, and technological application.Cryptocurrencies have built a reputation over the years as a store of value and promise to become units of exchange in the future as well.

Unlike Bitcoin, which was created as a monetary alternative to central currencies, Ethereum was developed as a platform that could enable programmatic smart contracts and applications using Ether. 

Ethereum smart contracts have become the main utility of the platform, considering that they support valuable real-world use cases such as DApps, DeFi, and NFT applications. They allow  automatic execution of agreements without the intervention of intermediaries such as banks for financial transactions or legal entities for legal agreements. Billion dollars in assets are already tied up in payments, lending, insurance, and all DeFi applications that are shaping the future of finance. Ethereum smart contracts are likely to transform the way public and financial services are managed, including categories such as governance, supply chains, markets, and digital identification. Despite stiff competition from other blockchain networks, Ethereum remains the most popular platform for DApps and hosts the largest number of DeFi projects, NFTs, and ERC20 tokens.

The Ethereum network has seen a significant increase in transaction volume and size since DeFi and NFT conquered the finance and art worlds. Such traffic has often resulted in systemic bottlenecks with  significant increases in fees that have rendered the blockchain unsustainable. In order to bring Ethereum into the mainstream and support an ever-growing number of transactions, the need for a substantial transformation arose. The upgrade from PoW to PoS will make Ethereum more scalable, efficient and sustainable while ensuring its fundamental decentralisation. 

The upgrade takes place solely within the backend among a technical framework while not touching the method users create dealings and hold assets on the network. 

The PoS validation method will be discontinuous  by massive validators which will too influence transaction verification and compromise the very nature of decentralisation. Critics of the modification conjointly see fragmentation as a threat to network security. As a result of fewer validators being required to guard little and multiple piece chains, they’re at bigger risk of exposure to malicious actors. 

Several crypto consultants believe that 2022 is an important year for the worth} of Ether.The digital currency has seen an unprecedented surge since its origination in 2015, going from simply $0.30 to a high of $4,800 in 2021, together with extremely volatile moves on the way. With the move to ETH 2.0, can Ether sustain with its large growth? whereas it’s not possible to predict the price of any quality supported technical or elementary analysis, crypto investors are unanimous in the basic cognitive process that ETH 2.0 will have an effect on the intrinsic value of Ether and far will depend upon the sleek implementation of the update. 

Like any important transformation, the initial launch of ETH 2.0 may be an on the spot explanation for volatility. Till the upgrade is tested, approved, and effective across the network, consultants predict months of uncertainty that may inevitably impact ETH’s price. Within the longer term, the transition to a additional property and economical PoS will profit Ethereum adoption for users and businesses  on the platform.How and once all of this can play out, however, raises doubts among 

 investors, who are showing signs of caution in anticipation of an additional elaborated outlook. a lot can depend upon whether or not the ensuing increase in demand and practicality is successful, and whether the revamped platform will maintain its leading position among all different innovative network competitors.

Both BTC and ETH have long been considered inflation hedges attributable to their decentralised nature and sort of limited supply. whereas Bitcoin’ capped supply of twenty one million coins could be a clear feature, Ether’s supply isn’t capped however is taken into account disinflationary. 

Unlike Bitcoin, Ethereum has a vast supply of Ether. However, its circulation is restricted annually by the extraction process. This mechanism is mentioned as disinflationary, since the availability later on adapts to the wants of the network  and value inflation is briefly stopped.With Ethereum’ new PoS accord mechanism, validators receive a dealings fee for every verified dealings rather than pleasing miners  with new blocks, as is that the case with PoW. The staking mechanism keeps Ether barred and also the more coins are staked, the bigger the possibility that they’ll become more valuable as there are fewer in circulation. In a every means, this method makes  crypto more scarce, albeit in a completely different way than bitcoin.

In February 2021, CME Group added Ether to its crypto offering alongside Bitcoin. This significant achievement means that more cryptos are being traded in the markets, which could help add value. In December 2021,  CME Group also introduced ether micro futures contracts, which are versions of  CME Group’s popular Emini stock index futures contracts. They are smaller contracts than institutional contracts and therefore more accessible and affordable for retail investors. This is also expected to add value to  Ether as more institutional and retail market participants gain greater exposure to the crypto and hedge their price risk.

Disclaimer: This report is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation, or needs of any investor. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. The Company has prepared this report based on information available to it, including information derived from public sources that have not been independently verified. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness, or reliability of the information, opinions, or conclusions expressed herein. This report is preliminary and subject to change; the Company undertakes no obligation to update or revise the reports to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Trading & Investments in cryptocurrencies viz. Bitcoin, Bitcoin Cash, Ethereum, etc. are very speculative and are subject to market risks. The analysis by the Author is for informational purposes only and should not be treated as investment advice.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

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