ETH Breakout in Light of Early Signs of 2.0 Upgrade

KEY TAKEAWAYS 

  • ETH/BTC breaks out owing to early signs of 2.0 upgrade.
  • Nimbus Beacon Chain assessment kicks off, and is to be completed in 4 months.
  • ETH inflation rate could see a significant dip from 4.3% to around 0.55%. Should 2.0 upgrade be successful, the current price surge could be on the cusp of a new tide. 

ETH led the charge over the weekend. The pattern is reminiscent of the breakout observed in April, when ETH moved up from its historical bottom and tested well against the former support, before reaching the crucial resistance level at 0.025. We’re seeing clear indications that ETH/BTC is finally rising above the line and gathering momentum for a possible bull run.

Source: AICoin

In our previous analysis, we highlighted the significance of the first phase of the ETH 2.0 upgrade centered on creating a new proof-of-stake blockchain network, dubbed the Beacon Chain. The imminent upgrade is expected to radically transform the world’s largest decentralized platform, incentivizing more ETH staking. The plan to roll out the Nimbus Beacon Chain, a prelude to ETH 2.0 upgrade, was announced on July 13, with a full-scale assessment to be implemented in three separate stages over a period of four months. 

Some researchers believe that the ETH staking ratio has to reach 13.8% in order for the security level of ETH 2.0 to be on par with that of ETH 1.0. It implies that 15.5 million ETH is to be staked, shrinking ETH annual inflation rate down to 0.55% from the current POW level at around 4.3%. This explains the direct correlation between ETH staking and price appreciation, pointing to the impact that a successful 2.0 upgrade will have on the price movement. 

Besides the impending 2.0 staking, ETHE and Defi will absorb a significant market supply of ETH. ETHE locks 1.6% of total ETH supply “permanently”, while Defi locks 3.7% of total ETH supply for the time being. 

Source: DAppTotal

Should ETH 2.0 succeed, could it perhaps herald the beginning of a new era?