The Fed's rate hike expectations have risen further, but can Ethereum 2.0 live up to our expectations?

For the first half of 2022, ETH has had its ups and downs. After reaching $3,900.01 on January 4, it fell to $2,933 on January 10 and is now hovering around $3,300. Ethereum's biggest half-year decline was nearly 25%.

Thinking back to the Ethereum market events of the last year, it reached $4,871.42 in early November 2021, the highest ever. In just three months, ETH has lost 39% of its value from its peak. From late last year to January this year, Ethereum and the crypto industry were near recession and caused a downturn, which can be associated with support. . . What issues will Ethereum face when moving to PoS this year? Can Ethereum surprise the market this year in the macro industry?

Rising Interest Rates Must Hit The Crypto Market

On January 11, Fed Chairman Powell said in an election hearing by the US Senate Banking Committee that the crisis could continue until mid-2022. President Powell described normalization efforts by US fiscal policy this year. Assets will close in March, interest rates will rise this year, and the balance sheet will begin to decline later this year. If the performance is in line with expectations, the Fed plans to act quickly.

During President Powell's speech, profits on EU and US Treasuries rose together, and profits on 10-year US Treasuries peaked daily, but the outcome reversed after the hearing. The S&P 500 fell for the fifth day in a row, and the tech equipment industry continued to support the economic recovery in the United States. Crypto assets, represented by Bitcoin and Ethereum, also recovered shortly after the hearing, highlighting the relationship between crypto assets and major commodities in the post-outbreak period. .

Minutes from the Fed's December meeting, released earlier this week, indicate that Fed leaders plan to begin raising rates sooner. Most Fed officials expect our rates to rise in 2022 to keep inflation afloat. The Fed also announced that it would reduce its monthly purchases of US Treasury funds and lend at $30 billion, double the previous level, to $15 billion in the first plan. The data shows that the Fed's balance sheet is now over $8.7 trillion.

At the time, the news caused a downturn in the tech industry and our major US markets fell. Meanwhile, jobs data released by the US Department of Labor reinforces expectations that the Fed will start raising interest rates. The reaction of the cryptocurrency market was also affected, and most of the big gains were lost, and this time around, many voices in the cryptocurrency community said that "the bear market is coming."

The impact of the macroeconomic environment on the entire investment economy is global. The consequences of the economic slowdown have resulted in a continued influx of medium-sized banks, which has had a positive effect on capital investment. But on the other hand, the monetary policy of the Fed, one of the biggest companies in the world, has always disappointed investors. Thoughts and risks like. If the Fed tightens measures and US Treasury yields rise rapidly, assets such as gold and cryptocurrencies will remain high. President Powell also told the conference he would step in and strengthen the rule of law. Since the Fed generally plays 'the water', there is no need to worry too much about progress over time. Yes, there is no denying that economic exits will be affected by changes in the macroeconomic environment and changes in Fed policy, be it Ethereum or other assets, and investors need to special attention. Attached is the 2022 Fed rate meeting time for you to use.

Statut Ethereum (ETH)

2021 is a special year for Ethereum. Meanwhile, the price of ETH hit an all-time high of $ 4,871.42. The development phase of Ethereum also made some progress, the most important being the improvement of the Ethereum London fork and disaster advice, which turned Ethereum into a deflationary model, which has a major impact on the value. of Ethereum. .

According to data from the owner of Ouke Cloud Chain, the current Ethereum damage is 144.9 million ETH, the 24-hour average starting price is 187 Gwei, and the Ethereum damage last day (The One from October 10) are 17,871.42 ETH. , breaking a new record for ever breaking peb The top three milestones we talked about for burn volume in the past 24 hours were OpenSea, Uniswap V3, and LookRare.

According to current data from TradingView, Ethereum's market capitalization has fallen 3% since its peak on December 8 last year, down 19.33%, which directly affected the market.

In the current state of the chain, Ethereum still dominates the crypto ecosystem. According to blockchain improvement data released by Mesari on the 4th, the performance growth rate of the Polkadot ecosystem has reached 147% since last year, higher than that of Cosmos (56%) and Ethereum ( 21%). and Solana (2%). However, for now, Ethereum is still responsible for the most L1 platform of the core process. Ethereum had the most active developers in November, with 250 developers each month, nearly five times more than Polkadot, Cosmos, and Solana.

Development of the Ethereum, Cosmos, Polkadot, Solana protocol design community

However, there is no denying that Ethereum continues to face "threats" from other public channels and L2 platforms. According to the data, Ethereum in most financial services sectors has been declining steadily over the past year. According to data from DefiLlama, in January of last year, the Ethereum protocol accounted for over 97% of the total downtime costs of the DeFi protocol, but due to the rapid growth of peer-to-peer protocols. and Solana, the Ethereum joint venture is now. 62.19%.

The defi TVL protocol is broadcast on all public channels Source: defillama

This is mainly due to Ethereum congestion and high oil prices limiting market expansion. Since the chain links are not expected to be usable until 2023, the "resistive" of the short circuit measurements falls below L2. So, can this situation be improved as the Ethereum 2.0 process increases this year?

What will ETH 2.0 look like?

Ethereum 2.0 has been a resounding success over the past year and has surpassed its goal 17 times since the launch of the Beacon Chain. According to data from OKLink, the current Ethereum 2.0 wallet balance exceeds 9.07 million ETH, accounting for 7.71% of Ethereum supply, and the number of beacon chain certifications exceeds 280,000.

And when will Ethereum 2.0 be used? Once the plan is complete, this year will see first the merger of Eth1 and Eth2, and then, after the merger, cleanup work to address the inappropriate features of the hybrid PoW and PoS model. At the same time, the redemption potential of ETH products at this stage will open up. Recently, Superphiz, a community security consultant for the Ethereum Beacon chain, said in a personal statement that the Ethereum Bellatrix (formerly Merge) fork is now one for the PoW chain so that it can be integrated into the PoS beacon chain. , but not immediately. . Beacon Chain. The ETH Termination Contract should be open for the ETH Termination Contract approximately 6 months after the merger (e.g. December).

After the merger, Ethereum will transition from PoW to a proof-of-payment (PoS) mechanism. This means that normal GPU mining will not be performed on Ethereum and the network will be run by PoS credentials and benefit from exchange rates.

How will this affect Ethereum? First, from a financial regulation and token value perspective, a change in the PoS would mean that more ETH is guaranteed and the role of miners as validators would reduce the value of the ETH generated, thereby reducing the amount of ETH. current ETH supply. Regarding supply and demand, sentiment can rise. Therefore, in the first half of this year, Ethereum felt the need to be affected by monetary policy. However, it remains to be seen whether Ethereum can live up to past expectations and assumptions, given the Fed-level factors mentioned in the first section.

Fernando Martinelli, co-founder and CEO of Balancer Labs, believes that integrating the Ethereum chain in 2022 will set the store up and make people aware of ETH's strength as a worthy retailer. A "big comeback" which will take place in 2022 ...

On the other hand, integrated circuits rarely change the performance of Ethereum. Various improvements in communication speeds, exchange rates, fuel prices, and other metrics will depend on sharing, one of the key features of the Ethereum 2.0 update. However, share chains are not expected to be used until 2023. In the meantime, Ethereum has been split into 64 shards for marketing and information sharing.

It will take a long time for the chain to arrive, but the transition to PoS could allow more work choices to rely on Ethereum again. Joey Krug, co-chief investment officer of U.S. cryptocurrency investment firm Pantera Capital, estimates that in 10 to 20 years, more than 50% of global financial transactions will be connected to the Ethereum network in some way. another one. The explosion of the so-called 'Ethereum killer' will not threaten the dominance of the Ethereum blockchain market.

However, the whole Ethereum 2.0 development plan is still huge and needs a lot of tweaking and updates to be supported. Maybe in 3-5 years. Therefore, the transition to the PoS mechanism is not the end of the Ethereum modification, but a new beginning.

We will see what surprises Ethereum patches can bring us. The ability to provide lower costs and better network performance will drive lower costs and continue to be L1's primary competitors. From this year, with the growth of DAO, DeFi, NFT and other businesses, it is hoped that the L2 network will continue to play a key role, and Ethereum will continue to be the blockchain for the integration of L2 networks.