The value of Ether has increased by 12%, but the price of Bitcoin has dropped by nearly 3%. The EIP-1559 aims to improve the inflation rates on the network and stabilize transaction costs by including a system that burns fees.

Since October 19th, the price of Ether (ETH), the second-largest cryptocurrency on the market, has increased by 12%. Meanwhile, the value of its rival, Bitcoin, suffered a decline of nearly 3%. Ether has also outperformed alternative cryptocurrencies such as Binance Coin (BNB) and Cardano (CAD).

The rise in the price of Ether happened before the arrival of an upgrade aiming to make Ethereum faster and more scalable. That event might lead to lower transaction fees for the users of the network.

Furthermore, the price of Ether has grown by 1,000% in the last year, exceeding the 380% increase in the price of Bitcoin. That significant increase responds to the popularity gained by the ETH network for various digital apps such as DeFi and NFTs.

Ether is trading at around USD 3.9 thousand and has a daily trading volume of over USD 30 billion. In addition, its market capitalization is approximately USD 469 billion, according to CoinGecko.

Many investors use the Ethereum market to position themselves in it and take advantage of what it offers. Cryptocurrency liquidity provider B2C2 said that there might be an Ethereum exchange-traded fund (ETF) on the US stock exchange.

Mike McGlone, a strategist at Bloomberg, said the US Securities and Exchange Commission (SEC) had discouraged ETF providers from launching new Ethereum-linked digital products. However, the high demand and competition suggest that it will inevitably happen.

What Ethereum 2.0 is Promising to Do

The Ethereum network launched the long-awaited London upgrade in August. The hard fork is the first step towards the Ethereum 2.0 network.

That update implemented many improvements on the Ethereum network. The launch of the London hard fork occurred as Ether still struggled amid new booms in decentralized finance markets and non-fungible tokens.

The EIP-1559 is precisely one of the most outstanding features of the London upgrade. Its objectives are to improve the inflation rates on the network and stabilize transaction costs. To achieve that, it includes a system that aims to burn the fees for the transactions conducted instead of giving them to miners.

However, the miners of the network still get rewards for every block they mine. On the other hand, users may voluntarily add tips for the miners for the transactions, thus motivating the priority to execute them.

Unlike Bitcoin, the supply of Ether does not have a ceiling, which implies that it grows without limits. For that reason, many investors are concerned about long-term inflation due to such unrestricted growth.

Regarding inflation, the upgrade EIP-1559 does not make Ether have deflationary behavior. However, it manages the speed of expansion of the supply, thus creating a balance in the cryptocurrency market.

Investors are aware that cryptocurrencies like Ethereum and Bitcoin play a crucial role in the world economy. For that reason, they should learn about the behavior of those assets before deciding to buy them.

By Alexander Salazar


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