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Ethereum 2.0 Is Online, A New Milestone Achieved-But Why Ethereum Price Is Still Down By 11%?

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The Ethereum 2.0 mainnet beacon chain, which is full of expectations, was finally launched yesterday night. Just as the crypto community was celebrating with joy, Bitcoin’s trend started to show downward momentum. And as always, the decline of Ethereum was even more significant than that of Bitcoin.

After Bitcoin hit an all-time high on Coinbase yesterday, Bitcoin’s price dropped sharply by more than 9% in just a few hours. 

With the Ethereum 2.0 network’s upgrade, which should be bullish for the ETH price, the Ethereum still fluctuates with the market, with a sharp correction of over 11%, which surprised many traders.

Ethereum 2.0 is the most significant upgrade in the history of the network. The ultimate goal is to solve network scalability issues through technologies such as sharding.

Before the upgrade, Ethereum processed about 15 transactions per second. According to Vitalik Buterin’s previous statement, if Ethereum 2.0 Phase 1 can be successfully launched in 2021, shard storage will be added by then, and DApps can use shared storage. Get the performance improvement of processing 100,000 transactions per second.

The shard chain will initially deploy 64 shards. The network at this stage is designed to be highly experimental. 

Phase 0 aims to test the proof-of-stake infrastructure without involving any other essential economic activities, and phase 1 intends to experiment the primary sharding model.

At this stage, there will essentially be 65 parallel blockchains, stage 0 beacon chains, and 64 new shard chains. There will be two-way communication and credit channels between Beacon Lian and all 64 shards.

At Implementation stage , major economic activities, not including pledges and smart contracts, will operate on the network. Sharding will no longer be just a basic data container but will have functions similar to Ethereum 1.0, such as virtual machines and smart contracts. 

Detailed specifications for this phase have not yet been finalized, and a lot of development work is required to make the network fully prepared for phase 2.

Since the market is more inclined to Buy on the rumor and sell on the news, Ether’s retracement may have long been traced. For example, at the end of last month, when there was news that Ethereum 2.0 is confirmed, Ethereum also dropped sharply from US$620.

Ether fell by 11% in just two hours last night, which surprised many traders. They believed that the importance and influence of this network upgrade should be given to Ethereum. 

After the release of the beacon chain, industry executives are also very optimistic about the medium and long-term growth trajectory of Ethereum and believe that this is expected to drive the overall market’s confidence in Ethereum. Joseph Lubin, the co-founder of Ethereum and founder of ConsenSys, believes that Ethereum 2.0 and Proof of Stake are milestone upgrades.

The Ethereum 2.0 beacon chain is a symbol of the spirit of open source. It first attracted many followers of Ethereum. Now, more than 27,000 validators from around the world are participating in the new Ethereum 2.0 consensus model. It proves that Stake’s implementation is a considerable upgrade to the encryption economic incentives and has made Ethereum an automated and objective trust foundation.

The analysis predicts that Ethereum will have a more substantial correction in the short term because when Bitcoin suddenly fell, the futures market suffers a huge impact, causing severe damage to the entire derivatives market. An anonymous trader named TraderKoz said it would become noticeable once Ether is consolidated above $620. If the correction continues, the short term’s fundamental support level will be at the $561 level.

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Mark Brennan
Mark Brennanhttps://thecryptobasic.com/
Mark is 27, holds a Master in Business Administration degree and works as a content Creator at TheCryptoBasic mostly on Crypto Market Updates. Since 2014 he has been active in the crypto sector. Thanks to the Business College in which other than Business subjects, he was taught about the disruptive potential of Blockchain. His interests include Blockchain technology and Crypto Market innovations. He also founded a small startup in which he gives lectures on cryptocurrencies.

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