Analysts: Ethereum is preparing for a big jump up

Steno Research analysts believe that Ethereum is still undervalued and has a chance for significant growth. Just like in 2021, when ETH doubled its value against Bitcoin in a few months, this cryptocurrency is preparing for a new rise, which became especially noticeable after the US Federal Reserve cut interest rates.

Since Ethereum switched to Proof-of-StakePoS — is a consensus mechanism in which network participants (validators) create new blocks in proportion to the amount of cryptocurrency they hold in their wallets. On September 15, 2022, its value fell by 48% against Bitcoin.

Last week marked the 2 year anniversary of the Ethereum Merge, during which the system switched from Proof-of-WorkPoW is based on computing power. to Proof-of-Stake. As part of this transition, the issuance of new Ether tokens was significantly reduced from 4% to less than 1% per year. The result has been negative net supply growth, as more Ether is burned through transaction fees than is released to stakers.

Ethereum, the native blockchain token, is up almost 8% since the beginning of the year, while Bitcoin is up 43%. But….

Steno Research analysts consider Ethereum’s significant lagging behind its main competitor, especially this year, to be a surprise, as they were very positive in their previous forecasts.

During the last bull market, the value of ETH doubled compared to BTC. The reasons were the growth of activity on the network, as well as the boom in decentralized finance (DeFi), the issuance of stablecoins and non-fungible tokens (NFTs), which were mainly built on the Ethereum blockchain.

The recent interest rate cuts by the US Federal Reserve will lead to an increase in online activity, which will have a positive impact on Ethereum.

Funds that invest in BTC (ETFs) are unlikely to continue to significantly outperform ETH ETFs as Ethereum has already proven its ability to outperform its rival in the past.

In addition, Ethereum developers recently decided to split the upcoming update, Pectra, by two (The Prague/Electra — Pectra). Pectra is expected to be the largest hard forkImplementation of fundamental changes to the blockchain protocol architecture. in the history of Ethereum. The process will begin in early 2025.

The main package will include eight Ethereum Improvement Proposals (EIPs), including EIP-7702, which aims to improve the wallet user experience.

The second package does not yet have a clear structure, but it may include proposals for changes to the Ethereum Virtual Machine (EVM), known as EOF, as well as the introduction of the PeerDAS feature, which improves the selectivity of data availability and will eventually provide some benefit to second-tier blockchainsA secondary framework or protocol built on top of an existing blockchain system..