Technical adjustments to Ethereum’s blockchain are the culprit behind a one percent price drop of the popular cryptocurrency ETH today, reports suggest.
The changes, known as Ethereum Improvement Proposal (EIP) 1559, would alter the way transactions are processed and will occur when the 12,965,000th block has been verified, which should be sometime Aug. 5, 2021 (tomorrow). ETH has surged of late, hitting a high of $2,712..41 today. It began the year valued at $737.71.
This drop could present a buying opportunity for traders and investors, as analysts expect the changes to create increased demand in the future.
The heightened volatility due to the anticipated changes saw the price of ETH to drop but quickly reversed directions.
Some anticipate that Ether will emerge as a more stable digital asset with more investors viewing it as a store of value – including coveted institutional investors that now play a larger role in crypto markets that were once dominated by retail investors.
The upgrade alters how Ethereum transactions are processed and provides more clarity in “gas fees” – the cost of completing a transaction on the Ethereum blockchain. Simultaneously, a transaction will cause a small portion of ETH to be burned – something that should reduce inflation of the digital asset.
Ethereum emerged as a major cryptocurrency due to its ability to create smart contracts or incorporate utility alongside transactional value. This is unlike Bitcoin which is more frequently described as an alternative asset that is akin to gold.
Bitcoin is the most popular digital asset in the world with a market cap of around $745 billion. Ethereum is less than half that amount (at the moment) with a value of around $315 billion.
Some crypto followers anticipate a dramatic increase in the value of Ether by 2022.