Will eth upgrades soar?

Factors that may lead to skyrocketing: 1. Technology optimization and market confidence increase; 2. Economic model adjustment; 3. Market expectations and speculation. Factors that may lead to a plunge: 1. Upgrade technical problems; 2. The overall market environment impact; 3. The "sell expectations and buy facts" effect.

ETH may experience a surge in price after upgrading, but it is not absolute. The following is a specific analysis:

Factors that may lead to surge

• Technical optimization and market confidence enhancement: If the upgrade can significantly improve Ethereum's performance, such as significantly improving transaction speed, reducing transaction costs, enhancing security, etc., it will attract more developers to build applications on Ethereum, and will also attract more users and investors to enter the Ethereum ecosystem, thereby driving price increases. Taking the upcoming Pectra upgrade as an example, it includes a number of proposals such as EIP-7691 increasing blob throughput and EIP-7702 improving user experience. If implemented smoothly, it will enhance Ethereum's competitiveness, which may trigger positive reactions from the market and drive prices to rise.
• Economic model adjustment: Upgrades may change the economic model of ETH, such as adjusting the issuance mechanism, introducing a destruction mechanism, etc., which increases the scarcity of ETH and thus drives price increases. For example, after Ethereum upgraded to "merger", the expected reduction in total supply will have a certain supporting effect on price1.
• Market expectations and speculation: Before upgrading, the market often has positive expectations for the effect of the upgrade, and investors may buy ETH in advance to drive prices up. Optimistic forecasts from some cryptocurrency analysts and experts will also further enhance market bullish sentiment, attracting more capital inflows, leading to a rapid price increase. For example, after the announcement of the Pectra upgrade news, Ethereum's price has risen to a certain extent, and some experts predict that its future increase may reach as high as 266%.

Factors that may cause plunge

• Upgrade technical problems: If there are technical failures, vulnerabilities or security problems during the upgrade process, such as uncompleted activation of the test network, abnormalities in the smart contract in the new environment, etc., it will cause panic in the market. Investors may be worried about the stability and future development prospects of the Ethereum network, thus selling ETH in large quantities, causing a price plunge 2.
• Overall market environmental impact: Even if Ethereum upgrades smoothly, if the global economic situation deteriorates, the overall cryptocurrency market is in a bear market, and there are major adverse changes in regulatory policies, it may offset the benefits brought by the upgrade and lead to a decline in ETH price. For example, if governments strengthen supervision of cryptocurrencies, restrict transactions or crack down on mining, it will have a negative impact on the entire industry and ETH prices will not be able to survive.
• "Sell expectations, buy facts" effect: The market may have fully digested the favorable expectations of upgrading before upgrading, and the price has risen sharply. After the upgrade, if the actual effect does not meet the market's high expectations, investors may choose to take profits, causing price declines. For example, although some previous upgrades have brought certain improvements, the price has not increased but decreased after the upgrade because it has not completely solved key problems such as network congestion.

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