A couple of days back, Ethereum officially activated a hard fork upgrade called “London” at Block 12,965,000. Unlike its previous improvement protocols, this one received more media attention and marked it as one of the most important developments in the Ethereum ecosystem. As a result, the price of ETH went up by more than 20% in the last seven days, and we are seeing it outperform bitcoin after climbing over the 100-day moving average.
This new runup in price is driving more and more interest, considering the massive uptick in user growth. However, we are also seeing many people make incorrect assumptions about this latest backward-incompatible hard fork. It is 100% correct that this upgrade eliminates several entry barriers and improves the Ethereum network’s user experience. But in no way it makes ETH a deflationary token like Bitcoin.
It is burning thousands of tokens every day and is projected to burn anywhere between 800,000 to 2.4 million ETH in 2021. This will positively impact the price as supply gets burned, but it is not going to happen in the long term. It would require some sort of structural changes and proposals to have that “deflationary effect.”
Source- BurnTracker
The co-founder of Ethereum, Vitalik Buterin, is now more confident about the ETH 2.0 transition with the successful implementation of the London hard fork. We are now witnessing major changes that reduce fee volatility and increase market efficiency, so this is only proof that the upcoming ETH 2.0 merger will be more promising and impactful.
With that being said, let’s look at some on-chain stats and understand what could be the ceiling for Ethereum’s price action in the short term.
When ETH crossed $3000 in May, it took less than a week to get over $4000, so we can expect a similar move in the next few days. With nearly 16 green handles, Ethereum is not looking to slow down anytime soon. The recent upgrade, network growth, and BTC correlation have a lot to do with that.
We also see the number of new entities continue to increase, and also the number of inactive entities goes down. This means the ones entering are here to stay with active participation. In terms of BTC correlation, we are now sitting at 0.94, and any major move bitcoin makes now will significantly support ETH price.
The volatility is also a supporting indicator to predict a trend reversal, and right now, we see a 30-day high of 85%. With ETH crossing $3k, we can expect this to go even higher.
In conclusion, the price action of Ethereum is extremely bullish in the short term, and we can expect to see it touch the 4k mark pretty soon. We cannot deny that the new upgrade introduced the ecosystem to many new users, which has boosted the price. However, it is also important to remember that the nominal amount of gas burned via transactions will never outpace the inflation rate of the network. For investors, the upgrade should be looked at with a bigger lens because it shows that Ethereum will not remain stagnant or become obsolete. It is only going to evolve.

Born and brought up in India, Karthikeya Gutta is a crypto journalist and freelance contributor for ItsBlockchain. He covers various aspects of the industry with in-depth analysis and research. His passion towards blockchain and crypto ecosystem is mainly because he believes it can really change the world and help millions of people.
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