Ethereum: USD/ETH (ETH=) big move to proof-of-stake – Why it’s taking so long

Ethereum: USD/ETH (ETH=) big move to proof-of-stake – Why it’s taking so long

Ethereum: USD/ETH (ETH=) big move to proof-of-stake – Why it’s taking so long

Like Bitcoin and other major cryptocurrencies, Ethereum saw a large spike in adoption in recent years, mostly driven by eager investors.

The digital currency is the second-biggest in the world behind Bitcoin, but it is significantly different in terms of design.

Both cryptocurrencies are based on blockchain technology, but Ethereum’s underlying vision is to build a decentralised virtual computer rather than a currency.

This has led its developers to telegraph a move away from ubiquitous proof-of-work consensus mechanisms, where miners solve cryptographic puzzles to vote on blocks which are then added to the ledger.

Instead, Ethereum was designed from the start to migrate to a proof-of-stake consensus mechanism, where participants vote on which block should be added to the blockchain by staking their own cryptocurrency.

Proof-of-stake plan

Implementing proof-of-stake presents a number of challenges, but it also has many advantages if it is done correctly – it reduces the wasted energy of GPU and ASIC mining while also improving accessibility for users.

The original plan for Ethereum’s original proof-of-stake migration was a rough idea of implementing a hard fork that changed the base consensus mechanism of the blockchain – similar to how many other technology upgrades are delivered.

However, the new plan is to move to Ethereum 2.0 – a new blockchain which will migrate old Ethereum users’ wallets and balances and will be powered by a proof-of-stake consensus mechanism enabled through sharding.

Sharding refers to blockchains which are linked together and can communicate freely to improve scalability and performance.

When it is completely implemented, Ethereum 2.0 will include sharding, proof-of-stake, a new virtual machine, and many other technologies which would be much harder to implement on the existing Ethereum blockchain.

Phased launch

The first phase – Phase 0 – of the Ethereum 2.0 implementation is already in testing and is named the Beacon Chain.

This Beacon Chain will manage the proof-of-stake protocol for both its own transactions and those of all its shard blockchains.

Phase 0 will also introduce ETH2 – an asset which can be earned for validating the Beacon Chain and purchased by sending standard Ethereum to a special smart contract.

The Beacon Chain is expected to go live this year, with users able to convert their ETH into ETH2 and to validate blocks using the proof-of-stake protocol.

Phase 1 will link the Beacon Chain with shard chains to enable parallel transaction throughput, greatly improving scalability and performance.

Phase 2 will reintroduce smart contracts and add virtual machines to each shard chain. This will support all the applications Ethereum users would be familiar with, such as dApps, broker contracts, and ENS.

According to the sharding protocol roadmap, the next phases will introduce a light client state protocol, cross-shard transactions, improved security, and super-quadratic sharding.

While the roadmap for the launch of Ethereum 2.0 is mutable, Consensys co-founder Andrew Keys said that he expects Ethereum 2.0 to move from Phase 0 to Phase 1 and launch shard chains.

“2020 will see Ethereum move stridently beyond Phase 0 of Ethereum 2.0, onto Phase 1 and the launch of shard chains,” Keys said. “Then, it’s game on.

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 180.10.

The projected upper bound is: 240.50.

The projected lower bound is: 207.86.

The projected closing price is: 224.18.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 33 white candles and 17 black candles for a net of 16 white candles.

An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend (which appears to be the case with FOREX ETH=). It then signifies that the momentum may be shifting from the bulls to the bears.

If the engulfing bearish pattern occurs during a downtrend, it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 83.6033. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 6 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 78.03. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 6 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 103.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 6 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 11 period(s) ago.

Rex Takasugi – TD Profile

FOREX ETH= closed down -3.230 at 222.370. Volume was 60% above average (neutral) and Bollinger Bands were 133% wider than normal.

Open     High      Low     Close     Volume___
226.700 229.800 217.110 222.370 131,174
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 206.13 161.17 174.33
Volatility: 63 63 70
Volume: 159,463 99,795 71,881

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX ETH= is currently 27.6% above its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into ETH= (mildly bullish). Our trend forecasting oscillators are currently bullish on ETH= and have had this outlook for the last 35 periods. Our momentum oscillator is currently indicating that ETH= is currently in an overbought condition.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.