Today, and observing how the crypto world has evolved in recent months, from BELOBABA we would like to update what was said about #Ethereum $ETH , months ago, which in the future would have the possibility of turning the crypto winter around and starting a new bullish stage, and above all, depending on its change from PoW to PoS.
We analyze what has happened at a fundamental level and also the current technical analysis situation. Jesús Sánchez-Bermejo, Chief Investment Officer of BELOBABA, will explain in this interesting post, analyzing all of this.
In January 2022, the Ethereum chain was undergoing a major upgrade known as Ethereum 2.0 or Eth2. This update involves a transition from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) mechanism. The update is rolling out in several phases and one of the key components is the introduction of Beacon Chain.
Beacon Chain is a separate PoS blockchain that went live in December 2020.
The merger, or the final step of Ethereum 2.0, involved the integration of Beacon Chain with the current Ethereum mainnet, effectively transitioning Ethereum from PoW to PoS.
The supply
The "supply" of Ethereum refers to the total number of units of the Ethereum (ETH) cryptocurrency in circulation at any given time.
The total supply of Ethereum is determined by the initial issuance and any changes that may occur over time due to events such as mining (in the case of Ethereum 1.0) or validation in the case of Ethereum 2.0, as well as deployment. of changes in monetary policy.
The total supply of Ethereum is dynamic and has undergone changes throughout network upgrades and improvements.
It is at its lowest level in the last 455 days.
Burning of #tokens of #ETH
Additionally, we can observe concepts of "burning." Therefore, there is less ethereum on the market every day.
For those who don't know what burning is in crypto jargon:
Token burning has become a common practice in the cryptocurrency space, influencing the supply dynamics and economic value of various digital assets…
Token Burning Definition: Token burning involves the deliberate and permanent removal of a certain number of cryptocurrency tokens from circulation. This can be achieved through various mechanisms, such as sending tokens to an unrecoverable address or provably destroying them using smart contracts.
Purposes of Token Burning: Supply Reduction: One of the main reasons for token burning is to reduce the total supply of a cryptocurrency. This scarcity can potentially increase demand and consequently the value of the remaining tokens.
Deflationary mechanism: Token burning serves as a deflationary measure, mimicking the principles of scarcity found in precious metals such as gold. As the total supply decreases, each remaining token can become more valuable.
Network Health: In some cases, token burning is implemented to improve the overall health and efficiency of a blockchain network. By reducing the number of tokens in circulation, congestion issues can be mitigated and transaction speeds improved.
Token burning mechanisms: Proof of burn: Some cryptocurrencies use a consensus mechanism called proof of burn, where users demonstrate the destruction of a certain number of tokens to validate their transactions or participation in network activities.
Smart Contracts: Token burning can be executed through smart contracts, where a predefined set of rules determines when and how tokens are permanently removed from circulation.
Implications and considerations: Economic impact: Token burning can affect the economic dynamics of a cryptocurrency, influencing factors such as scarcity, demand, and valuation.
Technical Analysis for Ethereum
Along with the exposed fundamentals, in relation to the burning of tokens after the merger, analyzing the ethereum (ETH) graph and thinking about the future, in my opinion, it has options, apart from the bitcoin halving that should make its price rise and Therefore, the rest of the cryptocurrencies or the majority, as is the case of the Top2 crypto, ethereum, may have bullish behavior in the long term.
And also, don't forget about the possible spot Ethereum ETFs, which would force the large investment funds that invest in these ETFs to buy the underlying (ethereum itself), which will come sooner rather than later.
In the short term, the price has managed to rise from areas of 1500 USD, to resistance zones at the old supports of February and March 2022, at the current 2230/60 USD.
Being therefore in areas of thinking whether it overcomes them or should go down to test a guarantee support to make a better floor in new ascending lows (LH: Low High of bullish continuation).
Be that as it may, the possibility that it could continue rising is high, although it may be necessary to wait a little and digest part of the previous rise to continue.
The long-term crypto winter bearish trend, for ethereum, has already been broken months ago and surpassed to the upside. We would be in a kind of crypto spring, preparatory to a 2024 that seems more than interesting, and not only for Ethereum since a new bull run could be approaching.
Chart view, in logarithmic style.
This content is for informational and educational purposes. There is no consumer protection. Your capital is subject to risk. It is not a recommendation to buy or sell crypto assets. Please do your own research or contact your trusted financial advisor.
