Key Insights
Ethereum's Pectra Upgrade could resolve many lingering issues around centralization and blob fees, and is expected to induce a rally till $4k soon.
Experts expect Ethereum's price to reach $4k in 2025 against previous estimates of $10k.
If Ethereum recovers, it could show a quick 15% recovery till $2200.
On the downside, $1200 levels could arrive soon if ETH breaks down below $1800.
The upcoming Pectra (Prague+Electra) upgrade that is aimed to decentralize Ethereum could induce a major boost in Ethereum's price, solving multiple problems faced by the Layer-1 network currently.
The Pectra Upgrade is a combination of the Surge (scalability) and the Scourge (decentralization) series of upgrades. Major changes in this upgrade would include a move towards Sharding from ProtoDank Sharding and the decentralization of the validator network by slashing staked ETH from 32 to just 1.
Though, Ethereum risks quantum computing-led decryption of its algorithm, it still prioritizes decentralization because of the dire need to increase validator count which in turn would be criticial for supporting Ethereum's Pectra Upgrade.
The upgrade is expected to solve numnerous crises in Ethereum starting from the Blob Fee issues, centralization risks, geo-localization risks and many others. All of these issues are discussed in detail in the next section.
There are several issues that have been troubling Ethereum, like Blob Fees, Geo Localization, and Quantum Computing.
Ethereum's low blob fees favors all projects built on top of it. However, the way the entire system was implemented, has resulted in a uncertain blob gas price.
Blobs are the temporary rollup spaces inside an Ethereum block that are used to store Layer-2 transactions. Once they are finalized on the chain, these blobs are then deleted, which is also the reason why they are dirt cheap.
Initially Layer-2 solutions loved this low-fee regime, however, they are now troubled by the quick rise and crashes Ethereum's blob fees, which creates volatility and uncertainty.
A threat from previous Biden Administration highlighted that Ethereum validators were too much concentrated on a single country USA and on a single server AWS.
Data on Ethereum Validator's Global Presence
Ethernodes
The above map clearly shows the concentration of 33% of Ethereum validators in the USA, but it fails to show a hidden data that most of these computers are not physical but rather based on Amazon AWS. It is often easier to setup a validator on cloud and pay a small fees rather than setting one of your own PCs 24x7 and risking material damage too.
A single denial of service from AWS or a single censorship in the Biden era would have crippled nearly one-third of Ethereum validators.
Ethereum is not quantum resistant, not even partially like Bitcoin. This creates a major threat from quantum computers which could easily decode Ethereum's nonce values within seconds to steal ETH from the validators and users.
Among major blockchains, only Algorand is currently quantum proof.
Standard Chartered revised its Ethereum targets from $10k to $4k, a reduction of 60% because of the blob fees issue which is the sudden spikes and falls in Ethereum blob fees which causes highly volatile settlement price for Layer-2 networks, rollups and other solutions like Uniswap.
This volatility results in a lower fees but creates a highly uncertain environment for all solutions that are built on top of Ethereum.
The Ethereum Foundation is expected to address these issues in the upcoming Pectra Upgrade.
Several crypto analysts have witnessed Ethereum going bullish with a leverage ratio of 40x. The total size of the position was around $182 million. The stop loss trigger or liquidation price for this trade is around $1127.
The motive behind the move is still unknown but our estimates suggest that it could be an effort to prop up Ethereum's falling prices. Another possible reason could also be that since Ethereum is already oversold (RSI<30), the trade could be placed strategically to benefit from a market recovery.
Ethereum's fees has crashed to its worst levels since the start of this bull run, almost erasing its entire gains. This month, we saw Ethereum falling down to $1800 levels after its price failed to cross $2500 in the first week of this month. A fall below $1800 levels could crash ETH to $1500 and then to $1200. At present, Ethereum is in the oversold territory with RSI around 30.
Ethereum USDT Charts Indicate 15% Potential Recovery
Tradingview
However, since the fall on the first week of this month, Ethereum's mometum indicators have been recovering back. RSI is in an uptrend and MACD too has shown a positive crossover.
If the current recovery sustains, ETH could pull back its price above $2200 levels before the end of March 2025.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.