Ethereum can set new records in 2023 amid recent updates

Ethereum can set new records in 2023 amid recent updates

Since the start of 2023, ethereum (ETH) has registered impressive gains amid the resurgence of bullish sentiments in the market.

After kicking off the new year at $1,192, ETH surged to a 90-day high of $1,732 on Feb. 21, representing an increase of 45% YTD (year-to-date). As of Mar. 2, ETH was trading at $1,641, down more than 5% from its 90-day peak.

Ethereum 1-year chart | Source: CoinMarketCap
Ethereum 1-year chart | Source: CoinMarketCap

The prospects for ETH are looking up as Coinbase announced the launch of Base, a layer-two sidechain for Ethereum. This move underscores the strength of ETH’s fundamentals, which are expected to fuel long-term growth.

Coinbase is setting its sights high with Base, aiming to bring over a billion users into the crypto economy. Even if it only attracts a fraction of this massive user base, the resulting adoption and usage will undoubtedly benefit Ethereum.

As ETH’s market factors and fundamentals continue to strengthen, investors wonder how this will impact its price in the coming days. Let’s delve into the details and find out.

What affects the ethereum price

Ethereum has become the go-to platform for developers, entrepreneurs, and investors. Despite a few hiccups in its journey, the blockchain-based digital asset has demonstrated its resilience and versatility time and time again.

Boasting a wide range of capabilities, from decentralized finance (DeFi) to gaming and data storage, Ethereum has established itself as the platform of choice for many.

As the project progresses, various vital themes and questions will heavily influence its path. From scalability issues to user adoption, what will be the defining factors determining Ethereum’s future?

The upcoming Shanghai update

Ethereum is ushering in a new era with the impending launch of the Shanghai upgrade (EIP-4895).

After their September 2022 upgrade, dubbed The Merge, Ethereum transitioned from the traditional proof-of-work consensus mechanism to a proof-of-stake (PoS) one, allowing users to stake 32 ETH to become validators. This transition made waves in the crypto market, as users had to lock their funds indefinitely to become validators.

But the Shanghai upgrade is set to change that, allowing users to withdraw their funds as validators as early as March 2023. The upcoming fork has sparked much interest in the crypto community as users wonder how this change will affect ETH’s price.

According to Staking Rewards, 14.84% of all ETH tokens are currently staked, and those owners now have the power to withdraw and sell their holdings.

On the other hand, the improved liquidity of ETH staking may lead to increased demand for ETH due to the improved staking conditions and the ability to stake directly with Ethereum. This could cause ETH’s price to rise due to the enhanced market equilibrium.

In preparation for the release, Ethereum developers are diligently conducting tests across three testnets, namely Zhejiang, Sepolia, and Goerli, to identify and address any potential glitches or bugs. 

The developers recently conducted a second dress rehearsal of the upgrade on the Sepolia testnet.

Although Ethereum developers have not announced an official date, given that we have already entered the month of March, the release may be postponed until April. 

Deployment of ERC-4337

Ethereum blockchain announced on Mar. 2 “account abstraction,” a game-changing feature that could revolutionize crypto recovery for online wallets. 

The upgrade, ERC-4337, was executed via the EntryPoint smart contract, per Etherscan data. Essentially, this new standard turns wallets into smart contract accounts, making them more user-friendly and secure against lost keys. 

The deployment of this feature was anticipated to take years. Still, the fact that it’s already operational on Ethereum means that the long-awaited era of user-friendly crypto is finally upon us.

Rising TVL levels

As the DeFi market continues to expand and mature, a metric commonly used to measure its success is total value locked (TVL).

TVL indicates people’s trust in these protocols and helps investors, traders, and developers better evaluate the health of the DeFi market.

As of Mar. 2, according to DeFi LIama, ethereum’s TVL totaled $29.41 billion, up from $23.11 billion on Jan.1, representing a 27% increase. This marks a fundamental shift in the market’s trajectory, as ethereum has continuously declined TVL since April 2022.

Ethereum’s TVL | Source: DefiLlama
Ethereum’s TVL | Source: DefiLlama

DeFi’s increasing TVL is a sign of its growth and could lead to further advancements in the industry. Hence, this increase in TVL indicates rising confidence in the Ethereum network and could yield significant rewards for the web shortly.

Fight against scalability: proto-danksharding

The Ethereum network has been no stranger to scalability woes, with skyrocketing gas fees and other unfavorable user conditions becoming increasingly commonplace.

As the adoption of the network grows, so do its troubles with scalability, along with the added complexity of maximum extractable value (M.E.V.), allowing validators to earn extra sums of money.

These issues can be solved with sharding. Sharding involves splitting up a blockchain into smaller ‘shards’ and has been viewed as a possible way to ease the scalability woes currently facing the blockchain networks.

Lately, danksharding, which takes a rollup-centric approach, has garnered much attention as a possible solution to Ethereum’s scalability issues. However, it is not yet ready to be adopted, as the Ethereum network is not ready for such a sharding design.

In response, EIP-4844, known as proto-danksharding, has been put forth, which seeks to implement the fundamentals of danksharding while laying the groundwork for its implementation.

Crucial to this is introducing a new transaction type, “blob-carrying transactions.” These blobs can contain up to 1 M.B. of data, thereby reducing the bandwidth burden on both validators and clients.

Although the scalability gains of proto-danksharding are modest, it remains an important first step in tackling the scalability issues of the Ethereum network.

What is the ethereum price prediction for 2023?

As of March 2, various price predictions for ethereum have been circulating, with many analysts suggesting an extension of the prevailing bull market.

CoinCodex’s short-term ETH price prediction suggested a climb to $1,764 by March 10.

In the long-term, Gov. Capital provided an Ethereum price prediction for 2023, forecasting a surge to $2,561 by the end of the year before the price could reach nearly $4,840 by 2024.

It is important to note that price predictions are often wrong, and long-term crypto prognoses are typically made by algorithms that can change instantly. Hence, always conduct your due diligence before making any investment decision.

The road ahead for Ethereum

As we look to Ethereum’s future in 2023, it is clear that the platform is set to experience tremendous growth.

Emerging technologies such as proto-danksharding and the upcoming Shanghai upgrade have bolstered the platform’s prospects as a leading blockchain platform, with investors seeking to benefit from its use case, reputation, and market positioning.

Moreover, in 2023, investors may be looking to move away from risky, volatile assets and instead embrace more secure investments.

According to blockchain research firm WuBlockchain, there is a potential for a wave of market hot spots in the second and fourth quarters of this year, providing no “adverse black swan events or external macro factors” get in the way.

This could mean a big upward trend for the market and investors shifting their money from speculative tokens to more established coins and assets. One such asset that could benefit from this trend is ethereum.

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