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Sometimes It is Nice to be Wrong

On July 22nd I wrote an article saying Crypto is Going Nowhere Until This is Fixed.
On that day, the price of bitcoin was $9375 and the price of Ethereum was $266.

Today bitcoin is at $11,820 and Ethereum is at $397, an increase of 26% and 49%.

I wish I were wrong more often. But seriously, two things happened to drive up the prices. (Especially Ethereum).

The first bit of good news is that the maximum transaction speed of Ethereum has now tripled from 15 to 45 transactions per second, in the last two years.

This was achieved by raising the gas limit of Ethereum transactions:

By raising the gas limit, Ethereum miners can collect more gwei (the internal currency of Ethereum) as a mining fee for conducting transactions.

Miners can charge more gweii (money) as market demand for Ethereum transaction services has been growing steadily for the last three years. Now the billion-dollar question is that will higher mining translate into permanently higher prices for the Ethereum token itself?

The second bit of good news about Ethereum the release of the Ethereum 2.0 testnet.

Version 2.0 of Ethereum will be a massive improvement over version 1.0. In the initial release, version 2.0 will be able to execute 1000 transactions per second, or 20x the speed of version one.

Version 2.0 has been in development for years, with the release date being pushed back multiple times. But now it finally looks like the promised release date of late 2020 or early 2021 will happen. And the market has reacted accordingly.

But will the rally last?

In 2020, bitcoin and Ethereum are up 64% and 300% respectively. But year-over-year, the price for bitcoin has remained flat and Ethereum is up “only” 73%.

The spring and summer are traditionally very strong for crypto but prices usually drop in the fall.  September, especially, tends to be the cruelest month.

If both Bitcoin and Ethereum can finish the end of September at these prices, let alone go up, that would be a very bullish signal.

DJ

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