Crypto Daily: DeFi And Berlin Hard Fork Setting The Pace For ETH

The second session of this week hasn’t been particularly special for Bitcoin. The price showed little change during the day, while trading volumes and volatility went down. Today, we would like to focus on Ethereum’s price dynamic.

For the first half of 2020, the community expected only one thing — the platform’s transition to the Proof-of-Stake algorithm, already in use by Ethereum’s key competitors. This update is called the Berlin hard fork.

Initially, the team planned to switch to the PoS algorithm by the end of 2018 in a hard fork named Constantinople. But before launch, vulnerabilities and weaknesses were found and the release delayed.

Vitalik Buterin said the long-awaited transition will take place before mid-2020. However, he recently announced the update will only be available by the end of the year. In his view, the team underestimated the complexity of the transition causing major delays.

Despite the delays, the community continues to wait for the update. In the first half of this year, the number of wallets with 32 ETH has significantly increased. This amount is necessary to start a validator node and begin staking. In other words, Ethereum supports are still counting on the implementation of the PoS protocol.

From a fundamental perspective, the development of the DeFi sector is also affecting Ethereum. Almost all projects from this industry are based on the Ethereum platform, and they have a significant impact on it.

As of early 2020, the leader in this sector was Maker (MKR). In June, another project with similar capabilities, Compound, launched its own token and surpassed Maker in market capitalization. Compound was even able to enter the top 20 cryptocurrencies.

There’s no doubt that DeFi is a big catalyst in finance. Yet, there’s work to be done. In a single month, hackers have successfully attacked DeFi projects resulting in substantial losses. That aside, DeFi applications are making the Ethererum blockchain even stronger.

The number of daily transactions on the Ethereum network has approached historic highs in January 2018 boosted by the increased number of DeFi applications available.

From a technical perspective, the chances for a correction to the range $195- $205 are mounting and it’s expected to happen within the next month. In the next six months, a downward extension to $170 is possible. Perhaps this mark will become a strong support for the coin.

Taking into account the upcoming transition and rising popularity of the DeFi segment, ETH could be standing between $450-$500 in 1 year.