"Clear eyes, full hearts can not be lost". One of my favorite quotes from "Friday Night Lights" is a great way to describe the new year. 2018 was hard, brutal and painful. But new opportunities are coming with a new year. The cryptographic markets started strong during the first week of January. Bitcoin earned almost 5% on Sunday and now trades at around $ 4.060. The broader cryptographic market also followed the example, as several important currencies generated substantial gains. Those coins include:
- Ripple (XRP) with a 3% gain
- Litecoin (LTC) with a 10% gain
- Stellar (XLM) with a gain of 5%
- Ethereum (ETH) with a gain of 2%
While earnings are a great way to bring the new year, the market is still very cautious about the next step. To make cryptocurrencies come out of the current bear market, it is likely that they will have to reach a market valuation of $ 230 billion. Bitcoin should also be trading at around $ 6,000. So, based on today's levels, there's still a lot of work to do.
Hard fork of Ethereum
Binance has just announced plans to support the Ethereum Constantinople Hard Fork, currently scheduled for January 16th. Traders must be reminded that January 16 is the expectation, but nothing is carved in stone. When asked about the firmness of the data, Peter Szilagyi, a principal developer of Ethereum, said: "We can only do it in mid-January, do not make a difference if we decide on an appointment or not, we can always postpone."
Ethereum has already had to delay the updating of Constantinople once before, after the developers detected some errors in the testnet platform. Given the complexity of the update, it would not be a surprise if further delay was needed.
Is the rigid fork necessary?
In a word, yes. There are some problems at play here. The first is the "difficulty bomb". The difficulty bomb is the term used to indicate the increasing level of mining difficulty which translates into a greater amount of time needed to extract a new block on the Ethereum blockchain. Blocking times are expected to start rising this month and could reach 30 seconds of freeze by May.
Some traders may wonder why this "bomb" was put in place. It is a bit complex but essentially designed as a deterrent for miners, who can choose to continue with the job test (miners compete directly against each other), even if the blockchain passes to Game Trial (where the rewards are based on stakeout). With the bomb in place, Ethereum will have to undergo regular network updates.
The update of Constantinople
Constantinople is a system-wide update that was approved at the end of August 2018. The update includes five different proposals for improving the Ethereum (EIP). After the proposals have been released on Ethereum, the blockchain will be permanently modified with new updates incompatible with previous versions.
This essentially means that the network of computers running the Ethereum software must update or continue to operate independently.
There is no doubt that the hard forks have caused a great deal of quarrels in the past. The most notable of which occurred with the hard bitcoin cash fork (BCH). Roger Ver, known as "Bitcoin Jesus" and the most important supporter of Bitcoin ABC, has taken a position in favor of the new software update. On the other side, Craig Wright, who claims to be Satoshi Nakamoto, was in favor of extending the maximum block size from 32 MB to 128 MB. ABC seems to have won that war.
The Ethereum rally can continue
Ethereum has had a monster rally in the last 30 days, earning over 80%.
So while the miners of Ethereum are probably quite anxious as we approach the gallows, the broader market seems to be quite fond of it. I expect the show to continue as we approach January 16thth.
One risk is that if developers announce another delay. A short delay would probably not have a significant impact on the price, but a delay of any significant length could lead to a sell-off. Traders looking to start a short-term trade may want to use trade stop limit.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. It holds investment positions in the currencies, but does not carry out trading activities in the short term or daily.
Featured image courtesy of Shutterstock.