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Ethereum resumes uptrend on the back of Proof of Stake hopes

Photo of: Joseph Stone
by Joseph Stone

Ether is benefiting from the recovery with a 20% increase over the last 24 hours to $2,600. Over 7 days, however, the decline remains at 23%.

Ether is still far from its all-time high of May 11 at $4,000. The value of the crypto-asset had been in free fall since then, carried away by the plunge of the cryptocurrency market. Ethereum had thus fallen back below $2,000.

But since May 24, the Ether is growing again. Over the last 24 hours, the price even recorded more than the 20% increase to go back up to a little over 2,600 dollars. Not all indicators are back to green though.

According to CoinMarketCap, trading volume remains down nearly 10%. Over a week, the price of the asset is still losing just over 20%. In addition, CoinShares estimates capital outflows at $12.6 million over the period.

Year-to-date, the balance sheet still looks largely positive. Ether investment proceeds totaled $924 million. For comparison, this indicator is $4.13 billion for Bitcoin.

The reason for Ether’s fall is the rising concern about the energy consumption of transactions on blockchains based on Proof-of- Work. Ethereum belongs to this category, as does Bitcoin.

However, unlike BTC, Ethereum is in the process of migrating to Proof-of-Stake and decreasing its power consumption. With ETH 2.0, this consumption should drop by 99%.

“According to my (very conservative) calculations, Ethereum will experience a reduction of more than 99.95% in its energy consumption after the merger,” evaluates a researcher at the Ethereum Foundation, Carl Beekhuizen.

By switching to PoS, Ethereum is therefore taking care of its carbon footprint, responding to a real environmental concern. A transaction on ETH 2.0 is equivalent to “about 20 minutes of television”.

Ethereum has a chance to regain the confidence of investors and to increase the value of its token. Moreover, the blockchain has other strengths, starting with its prominence in the DeFi and NFT markets.