The recent bull run in the last few days seems to have benefited most of the major cryptocurrencies including ETH and BTC but not so much for less popular altcoins. The price movements suggest that it was largely the result of institutional buying, which means the smart money is currently controlling the market.

ETH performance was particularly exceptional as it managed to recover from the previous week’s low of $1,706 on July 20^th after which strong buying pressure changed its trajectory. Buying volume has prevailed for the last 9 days, allowing it to peak at $2450 earlier today but it looks like some bearishness is back in the market. ETH traded at $2338 at the time of this press.

Source: Binance

Meanwhile, the volume indicator shows that ETH’s buying volume has been declining for the last four days, paving way for a slight bearish retracement after testing resistance at around $2440. The retracement is also in line with the overall market performance but the prevailing question is what next for Ethereum?

The impact of the London Fork

Ethereum is scheduled to execute the London Fork upgrade on August 4 as part of its roadmap. Major blockchain projects usually experience a price uptick days before a major upgrade and it can be argued that the ETH rally this week is a reflection of that observation. However, Bitcoin still has market dominance and its price action tends to affect the price movements in the rest of the market.

If Bitcoin were to go through another crash, it would likely affect ETH but the upcoming update would likely lessen the impact of that drop. The EIP-1559 upgrade might potentially allow ETH to overcome Bitcoin’s price action influence given that it is one of the major and most anticipated upgrades to the Ethereum protocol.

The upgrade is supposed to introduce gas fee predictability and fee burning which means it will boost ETH scarcity. This is good news because scarcity boosts the value of an asset, thus making a strong case for hodling ETH. This is why the cryptocurrency will likely overcome selling pressure and due to less selling, while at the same time potentially benefitting from more investment courtesy of the bullish outlook.

What to expect from ETH after the upgrade

Although the upgrade is a potential catalyst that might yield a substantial price uptick, other market forces are still at play, making it difficult to predict price movements, especially in the short run. For example, Bitcoin’s dominance is still a factor to consider, which means that another major market crash could theoretically cause bearish sentiments that will also affect ETH. On the plus side, ETH’s long-term performance will be more secure courtesy of EIP-1559 and other upgrades designed to make the Ethereum blockchain more functional and attractive to developers.

The upgrade is part of the Ethereum 2.0 transition which will transform the network from proof of work to proof of stake. The major advantages to these changes include higher transaction throughput which will make the network more secure and appealing to more developers. Network congestion due to transaction throughput limitations has been one of the major challenges for the Ethereum blockchain. It is also likely that it will address the hefty fees on the platform.

The upgrades will help facilitate a smooth junction for network performance and network demand. The upside is that these changes can potentially pave way for more demand and utility for ETH, which is a good combination considering that the cryptocurrency is expected to become more scarce due to fee burning. The ongoing developments are analogous to removing the filter preventing ETH from competing more effectively with Bitcoin in terms of price performance.