Ethereum reclaims $2.4K in days leading up to London hard fork

Ethereum, ETH
Image by Pete Linforth from Pixabay

Key Ethereum takeaways:

  • London fork is near, with its reduced fees and cuts of the ETH supply increase.
  • The upgrade’s effects on the price action
  • Technicals behind the rally

Yerevan (CoinChapter.com) – Ethereum(ETH), the most extensive Decentralized Finance (DeFi) platform to date, reclaimed an essential benchmark of $2,400 in the early European session Friday. The price action pumped throughout the past nine days, culminating at $2,452 and stabilized at $2,397 hours later.

The bullish rally appeared to be spurred by the recovery across the altcoin market in Bitcoin’s footsteps and the upcoming London hard fork upgrade scheduled for August 4.

Also read: 4 reasons why Ethereum prices surged 210% in H1/2021

London hard fork

There is much talk and speculation in the crypto community about the upcoming upgrade. One of the fundamental changes is the shift from proof-of-work (PoW) to the proof-of-stake (PoS) algorithm. In addition, one of the five upgrades, the EIP 1559, also promises to reduce the notoriously high gas fees by implementing a token burning mechanism, which will also reduce the yearly increase of the ETH token supply.

The supply will decrease once Ethereum moves to a new transaction verification method. In addition, computers supporting the network will stake ETH coins instead of miners, cutting the supply over time. The scarcity could create higher demand, and the price will subsequently rise.

The token supply reduction is an essential factor that makes some experts more optimistic about the future price of Ethereum. “The London upgrade is one of the most interesting and important upgrades in the history of Ethereum,” commented Kyle Samani, co-founder of Multicoin Capital investment firm. He noted that the supply reduction would help the digital asset maintain a higher price.

The Ethereum price action is still bullish, with a total gain of 41 percent since July 21.

Also read: Bitcoin brings Ethereum near a three-week high ahead of London hard fork.

ETH daily chart technicals

The second-largest digital currency by market cap ($279 billion) traded in a descending triangle pattern for over two months before finally breaking out on July 24. The price action broke the confluence of resistance from the descending trendline and the 50-day simple moving average (SMA-50; red wave on the chart below).

As a result of the bullish momentum, the 20-day exponential moving average (EMA-20; blue wave) corrected its trajectory north and scored a golden cross with SMA-50.

Ethereum reached $2,400 ahead of the London fork. Source: ETHUSD on TradingView.com
Ethereum reached $2,400 ahead of the London fork. Source: ETHUSD on TradingView.com

In detail, the golden cross is a solid bullish predictor that occurs when a short-term MA crosses above a long-term MA after a bearish phase. Once the charts register a golden cross, traders can expect further gains for as long as the short-term MA manages to hold its dominant position.

The relative strength index (RSI; purple graph at the bottom of the chart) moved sideways, maintaining a high value of 62. If it continued the ascend beyond the ‘normal’ territory (30-70), the risk of betting on an overbought token would be too high, and the traders could have pulled back to avoid losses, thus creating a sell-off wave. On the other hand, consistently high RSI is indicative of the traders’ confidence in the token, without the fear of securing their assets by an overbought coin.

The overall prospect for the upcoming sessions looks bullish so far. The London fork ahead carries several important updates that could bring Ethereum network users faster transactions with lower gas fees. Subsequently, the ETH price prediction could also be bullish, promising further gains.

Also read: Holo Price Follow Up 17: No havoc, after all, thanks to Musk, Dorsey, Wood, and Powell.

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