A lot of positive things happened in January 2023 on the Ethereum network, which created a critical mass of improvements for the jump in the price of this asset. Let’s look at what is happening with Ethereum and why we should expect its price to rise as early as February.
Interesting events lie ahead
Technical analysis gurus are very excited to report that the $ETH chart is above its 200-day moving average (200MA) for the first time since 2021. This is a very important technical analysis indicator, which, for the last time in history, led Ethereum to a booming price.
But what are the objective events behind this ambitious prediction? Let’s try to list Ethereum’s recent successes to confirm the validity of this prediction.
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Activity on the Ethereum network
There has been a notable increase in activity on Ethereum over the past month:
- CryptoQuant has seen a significant increase in the number of ETH smart contracts in the last four months, which is very good news for Ethereum. This means that services based on this network are booming.
- According to the latest data from Dune, L2 protocols for Ethereum scaling consumed a record 32b of gas in a week (Optimism accounted for the largest share). This is a solid metric showing excellent growth for Ethereum scaling solutions.
- Ethereum passed the 500,000 validator milestone the day after the recent release of devnet 2 (the new test network for the Shanghai update). This means that the network infrastructure is growing and becoming more robust.
According to Beaconscan.com, as of January 16, 2022, there are about 501,215 validators registered on the Ethereum blockchain — on the same day last year, there were 282,249, which means a 77.58% increase over the calendar year.
Liquid Staking Derivatives (#LSD) are blowing up with the upcoming Ethereum's Shanghai Upgrade.
— Chaineye | Gitcoin Alpha Round (@Chaineye_tools) January 11, 2023
The main event in February
But the main event is expected in February. If the recent Ethereum Merge aimed to change the Proof-of-Work consensus mechanism to Proof-of-Stake, the next Shanghai Upgrade should bring a number of critical changes to EVM functions.
This Ethereum Shanghai Upgrade is intended to make the network more scalable and provide better liquidity for Ethereum. This is another important milestone in the development of this network.
This is how the user @ETH_Daily summarizes this update:
The Shanghai hard fork is expected to bring significant improvements to the network, including increased scalability and security, as well as the introduction of a new consensus mechanism that will allow for more efficient and decentralized decision making.
What’s also important for the future of $ETH is that Bitwise Asset Management analysts previously said that Ethereum will become more deflationary in 2023 and that the number of coins frozen in stacking will rise after the February Shanghai update. This should have a positive effect on the price of the asset itself:
We anticipate that there will be significantly more demand to access and use Ethereum applications in 2023 vs. 2022, which will increase the amount of ETH burned via transactions. As a result, the total amount of ETH in circulation will decrease by 1% or more, with huge implications for investors.