Ethereum, the second-largest crypto to date, made a whopping price surge above $2,700, as the Ethereum community is franticly preparing for EIP-1559, or the London hard fork.
Almost three-quarters of the nodes are already prepared for the update, while the rest 25% should update their clients soon.
Alongside the highly anticipated EIP-1559, the hard fork would introduce four more improvements. However, the Ethereum community is eagerly waiting for EIP-1559, while ETH miners threatened to shut down their rigs because the update recalculates the way transaction fees are distributed among miners.
The base-fee burning mechanism, never seen on such scale, would burn a part of the base transaction fee, effectively reducing both miner revenue and circulating supply. According to estimations, around 6,000 ETH would be burned per day, reducing the annual supply by 1.4 percent.
However, banking giant Goldman Sachs noted that the London hard fork would not make Ethereum a deflationary asset by default. It would rather decrease Ethereum’s inflation rate.
Meanwhile, analysts have mixed opinions about how the Ethereum community would perceive the consequences of the update. Miners expressed their cautions about the update cutting as much as 20 to 30 percent of their revenue due to the fee-burning mechanism kicking in.
Meanwhile, the anticipation around Ethereum pushed its price above the $2,700 resistance level for the first time since June 7, 2021. The upwards move coincides with the increased social media activity, related to Bitcoin’s runner-up.
The price increase sliced through the 100-day Simple Moving Average (SMA), which investors see as a major bullish indicator. However, the 78.6% Fibonacci extension level at $2,710 acts as a major resistance for the now sub-$2,700 price point of Ethereum. If Ethereum continues to climb it could reach the 127.2% Fibonacci extension level at $3,339 in the longer term.
On the downside, the Relative Strength Index (RSI) metric shows Ethereum being oversold on August 2 and August 4. If the second-largest crypto to date fails to keep the momentum, it could fall to the 61.8% Fibonacci extension level at $2,493. Further possible support zones are the 38.2% Fibonacci extension level at $2,187, which is on par with the 50-day and the 200-day SMAs.
Currently, Ethereum retracts slightly from its 12% daily surge, trading at $2,591.65.