Ethereum (ETH), founded in 2015 by Vitalik Buterin and Gavin Wood, represents almost 20% of the $1.1 trillion global crypto market. It is one of the most popular virtual currencies, second only to the pioneer of cryptocurrency, Bitcoin. It is also the most well-established and largest open-ended decentralized software platform. Ranking second, it has a market cap of over $200 million.
2023 has seen a price upturn, with the Ethereum price USD plummeting over $1700 in February. January was great, with the leading altcoin increasing by over 45% and finally experiencing long-awaited spikes. This is comforting since last year, the ETH price fell from $3000 to $1000 and had several notable ups and downs. If there’s continuity in demand, the end of Q1 might end on a positive note and reward investors who chose to buy the dip. If you want to venture into the crypto world, remember that the market is highly volatile, consider the risks involved, and do not invest more than you can afford to lose.
Let’s dive into the topic and see what major upgrades Ethereum will suffer, how the UK and the US approach it and the necessary tips to trade it this year.
Ethereum’s Shanghai Upgrade scheduled for March
To understand the implications of Ethereum’s Shanghai upgrade that’s expected to happen somewhere in March 2023, let’s review some of the key features of the Merge – the update that occurred on 15 September 2022.
The Merge had several significant implications regarding decentralization, energy usage, legal classifications, etc. It refers to software upgrades fulfilling the long-awaited transition from the Ethereum network’s proof of work (PoW) to proof of stake (PoS). The highlight of this event was that the upgrade succeeded in bringing down Ethereum’s network power usage by over 99.9%. But, as traders can recall, the coin didn’t see much price volatility. However, this might not be the case with the Shanghai upgrade, as it’s expected to have more price implications than the Merge.
More precisely, there’s a common belief that it’s going to be more than just a technological shift with no economic impact, and change the supply and demand of ETH in the short- and long-term. As a result, some experts believe in greater price fluctuations, meaning that a seasoned trader can seize the opportunity to profit from an increase in value.
However, predictions and assumptions are everywhere you look, and nothing can guarantee wealth. It remains to be seen whether this will be a fruitful upgrade resulting in price increases or simply a non-event.
Until then, the world rejoices that validators and stakers will be able to withdraw ETH that has been staked since December 2020, accounting for about a seventh of the total supply of the token, or for 16 million tokens with a value of more than $26 billion.
Scaling Ethereum after the Merge
At the infrastructure layer, this year will likely go down as one of the most important years for scaling Ethereum. This means boosted network transaction speed and throughput, or more transactions per second without a higher cost of validating them.
Layer 1 refers to the blockchain’s base infrastructure, where blocks are created, transactions are completed, and a native crypto coin is used to reward individuals who secure the network and pay transaction fees. Recent developments have led to a “flight to quality” L1s, particularly Ethereum, where most customers, infrastructure, and liquidity reside, and a desire to strengthen what’s already working versus looking for the new Layer 1.
Similarly, 2023 expects a decline in web3 attacks as developers employ more robust security tools and practices and build on more proven protocols.
Ethereum – on the legal side
Regarding legislative frameworks, US Senator Sherrod Brown (D-Ohio) expressed the willingness to work on crypto legislation and paved the way for it in November 2022. This implies that there might be a bipartisan agreement on critical aspects relating to stablecoins and broader cryptocurrency oversight in the United States, as well as potential regulatory clarification regarding the allowed limitations of banks interested in engaging with digital currency.
Although the United Kingdom faced its own political issues last year, the desire stated in April to be a crypto hub seems to persist. Economic Secretary Andrew Griffith reiterated the commitment to being a vital hub for the nascent industry, saying the failure of FTX isn’t a justification to abandon the plan. The Financial Services and Markets Bill proposes expanding the current regulatory system to include “digital settlement assets.” With it being debated in Parliament, the FCA is prepared to take on new powers to oversee crypto markets.
Tips for trading Ether in 2023
One of the most significant distinctions between purchasing Ethereum and trading it is that the latter may be done for a short or lengthy period, depending on your objectives. If you’re going to invest in the token, you must consider the ups and downs of the price and don’t give in to the temptation to copy other high-profile traders’ moves.
Let’s see what affects ETH price fluctuations to build a successful crypto trading strategy. It’s essential to be able to assess price movements in trading. The crypto market is often correlated with Bitcoin, so Ethereum’s value is also measured against its rival’s price, going up and down simultaneously. Its price is impacted by supply and demand, meaning that the price rises when supply decreases and demand increases. Conversely, it falls when demand decreases and supply increases.
Additionally, start small if you’re a newbie to crypto trading. Instead, spend only the money that you’re comfortable losing. You can, for instance, start with as little as $10. You won’t have a tremendous ROI, but you’ll learn the basics of trading without burning a hole in your pocket.
And last but not least, plan your strategy carefully. This means that you’ll consider your risk tolerance level, type of trader, and objectives. Risk is native to the crypto market, and you want to take it seriously.
Ethereum is prone to undergo remarkable upgrades, which will come to the public’s attention in the following period. Let’s keep an eye on it to see if they will impact the token’s price, and, if so, to what extent.