Ethereum’s developers have opted to split their upcoming Pectra hard fork into two packages to mitigate the risks of bugs and ensure a smoother upgrade process. Meanwhile, Ether (ETH) has struggled to gain upward momentum throughout 2024, prompting some analysts to view it as a contrarian bet for the remainder of the year. Despite facing short-term price challenges, experts remain cautiously optimistic about Ethereum’s long-term potential, with the possibility of a market reevaluation and a rebound later in the year.
Ethereum’s Pectra Hard Fork Split into Two Packages to Minimize Risks
Ethereum developers have made the strategic decision to split their upcoming Pectra hard fork into two distinct packages. The move, confirmed on Thursday, aims to reduce the risk of bugs and other technical missteps by narrowing the scope of the highly anticipated upgrade, which was initially set to be Ethereum’s most ambitious hard fork to date.
The decision to break up the Pectra upgrade wasn’t entirely unexpected. Ethereum developers had been contemplating this approach for some time, given the complexity and size of the planned upgrade. Discussions in recent months highlighted the concern that attempting to implement all the changes in one go could introduce significant risks, such as code bugs that could affect the stability of the network.
By splitting the hard fork into two packages, the developers aim to reduce these risks, allowing them to focus on smaller, more manageable sections of the upgrade. This also provides the development team with the opportunity to test and debug more thoroughly before the entire upgrade goes live. The goal is to ensure that each part of the upgrade is functional and stable, thereby minimizing disruptions to the Ethereum network.
Pectra is Ethereum’s latest hard fork, a type of upgrade in which the blockchain undergoes a significant protocol change that isn’t compatible with older versions, thus creating a ”fork” in the network. Ethereum regularly implements such upgrades to introduce new features, improve security, and optimize performance.
Initially, Pectra was shaping up to be Ethereum’s largest hard fork to date. However, splitting it into two packages allows developers to narrow their focus and take a more phased approach to its rollout.
Despite the change in strategy, the timeline for Pectra’s release remains largely intact. Ethereum developers still expect the first package of the upgrade to go live in early 2025. This package will include eight Ethereum Improvement Proposals (EIPs), which are specific changes proposed to enhance Ethereum’s functionality.
One of the key proposals in this first package is EIP-7702, which seeks to improve the user experience for Ethereum wallets. This proposal is notable for having been devised by Ethereum co-founder Vitalik Buterin in a matter of just 22 minutes.
The Second Package: EOF and PeerDAS
The second package of the Pectra upgrade will remain a work in progress for several more months. The final contents of this second part are yet to be determined, but one key proposal under consideration is an upgrade to the Ethereum Virtual Machine (EVM) through the EOF (Ethereum Object Format). The EVM serves as the backbone of the Ethereum blockchain, running smart contracts and dApps. EOF would improve how the EVM handles code, leading to more efficient and secure processing of transactions.
Another feature potentially included in the second package is PeerDAS, which introduces improvements in data availability sampling. PeerDAS could play a crucial role in enhancing the performance of layer-2 blockchains that run on top of Ethereum by making data more readily accessible and verifiable. This would ultimately benefit projects that rely on Ethereum’s scalability for higher transaction speeds and lower costs.
While the first package is largely set, Ethereum developers are approaching the second phase of Pectra with caution. They acknowledge that the scope of these upgrades is likely to change over time, based on ongoing research and the evolving needs of the Ethereum ecosystem.
Alex Stokes, an Ethereum Foundation researcher who led the call in which the decision to split Pectra was finalized, expressed the importance of remaining flexible with the second package. “There seems to be agreements to split current Pectra somehow,” Stokes said during the call. “And then downstream, we can figure out what comes next.”
Stokes also emphasized the importance of keeping the second part of the upgrade as streamlined as possible to ensure that it can be shipped quickly after the first package. ”I hear everyone that, it can be tricky to not want to put new things in. I would lean towards, again, keeping the scope very small, just because then that’s going to maximize our chances of actually shipping the second fork very quickly with respect to this first one,” he added.
What’s Next for Ethereum?
Splitting the Pectra upgrade into two packages is a strategic move that reflects Ethereum’s commitment to delivering robust, high-quality upgrades without compromising the network’s stability. As the development team continues to finalize the contents of the second package, Ethereum users can look forward to a more incremental but well-executed improvement to the blockchain.
This phased approach also aligns with Ethereum’s broader roadmap, which includes ongoing efforts to scale the network, reduce fees, and improve user experience, all while maintaining security and decentralization.
As the first package of Pectra gears up for an early 2025 release, the Ethereum community can expect to see continued progress and innovation from its developers, paving the way for a more efficient and user-friendly blockchain platform.
Ethereum Faces Contrarian Bets: Can Ether Stage a Rally in 2024?
As 2024 progresses, Ether (ETH) continues to struggle, raising questions about its future trajectory. Despite Ethereum’s historical dominance in the cryptocurrency market, the price of ETH has yet to gain significant upward momentum this year, leading some investors to wonder whether it presents a contrarian investment opportunity, or if further downside is imminent.
According to Matt Hougan, the Chief Investment Officer of Bitwise Asset Management, Ethereum may well be the “underdog” of 2024. In a blog post published on Sept. 17, Hougan expressed his belief that Ethereum’s current struggles are temporary, and that the market may soon reevaluate the cryptocurrency. Despite ETH hitting a 42-month low against Bitcoin (BTC) on Sept. 16, Hougan remains optimistic about Ethereum’s long-term prospects.
“From my seat, none of Ethereum’s challenges seem existential, and its opportunities are brimming. I suspect the market may reevaluate Ethereum as we get closer to the November elections and any regulatory clarity that emerges. For now, it looks like a potential contrarian bet through the end of the year,” Hougan wrote.
Ethereum’s price stagnation has been especially notable compared to its main rival, Solana (SOL). While Solana is up 38% year-to-date (YTD), Ether has remained flat, a situation that has puzzled many investors. However, Solana’s recent price struggles against Bitcoin suggest that it too may face similar headwinds as Ether in the coming months.
Downside Risks Loom for Ether in the Short Term
While some analysts see potential for Ethereum to rally in the fourth quarter of 2024, others believe that Ether could experience further downside before the year ends. A pseudonymous crypto trader, known as GGG, noted in a Sept. 19 post on X that ETH is in a precarious position, comparing its current price action to previous bear market rallies.
“I think we are in a similar spot on $ETH as on the left box. Bear market rally then nuke lower is my guess for now,” GGG stated, referencing a potential further decline for Ether.
On the technical side, Ether’s price is retesting its 700-day accumulation range, a crucial support zone around the $2,200 level, according to trader Inmortal. If ETH can stay above this level, it may have a chance to regain upward momentum. However, if the price breaks below, the outlook could be more bearish.
Adding to these concerns, CoinGlass data indicates that a drop below the $2,200 support level could trigger over $1 billion in leveraged short liquidations across all exchanges. Such liquidations could potentially exacerbate Ether’s downward momentum, causing a sharp decline before any recovery takes place.
The launch of the first Ethereum exchange-traded funds (ETFs) in July was initially seen as a potential catalyst for Ether’s price. However, the debut of these ETFs had little positive impact on the market. Instead, ETH’s price fell nearly 30% since the ETFs’ launch, accompanied by net negative flows. The lackluster performance of the Ethereum ETFs has dampened hopes that institutional demand could drive Ether’s price higher in the near term.
Despite the recent bearish sentiment, there are still signs that Ethereum could stage a recovery in Q4 2024. One of the more bullish scenarios is the possibility of a triple bottom chart formation, which could serve as a springboard for a new Ether rally.
Crypto analyst Crypto Bullet pointed out on Sept. 17 that Ether’s current price pattern resembles its 2021 trajectory, when a similar triple bottom formation preceded a significant rally. “ETH 2021 vs ETH 2024. Same triple bottom? Looks pretty similar so far,” the analyst noted.
If this triple bottom scenario plays out, Ethereum could see renewed upward momentum in the fourth quarter, especially as market conditions improve and the overall crypto space enters a more bullish phase.
Bitcoin’s Bull Run Could Boost Ether
Ethereum’s price could also benefit from a broader market rally, particularly if Bitcoin enters the next parabolic phase of its bull cycle. Historical chart patterns and Bitcoin’s average monthly returns for Q4 suggest that Bitcoin could be gearing up for a significant rally, with some analysts predicting that BTC could reach $92,000 by the end of the year.
Such a rally could provide a much-needed boost for Ether, as Bitcoin’s movements tend to have a ripple effect across the broader cryptocurrency market. If Bitcoin does indeed start a parabolic run in October, Ethereum may follow suit, pushing ETH’s price higher as investors regain confidence in the market.
One of the key factors that could impact Ethereum’s performance in the coming months is regulatory clarity. Hougan, among others, has noted that the outcome of the November elections in the United States could have significant implications for the crypto industry, particularly if it brings more definitive regulations for digital assets.
If clearer regulations emerge, particularly in regard to the classification and treatment of cryptocurrencies like Ether, it could lead to increased institutional interest and a more favorable investment environment for Ethereum. With these regulatory developments in mind, Ethereum may become a more attractive investment as we head into 2025.
This article was originally Posted on Coinpaper.com
