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ETH/BTC Exchange Rate Breaks New Low
Cancun Upgrade
Cancun Upgrade Timeline
Due to the rapid rebound of Bitcoin, the ETH/BTC exchange rate has fallen below the 0.05 support that has held for the past few months, currently at 0.0493, approaching the previous low of 0.04908 in 2022.
In this market environment, Ethereum seems to be increasingly unpopular as an investment target. The only opportunity to reverse ETH’s fortune seems to lie in the upcoming Cancun Upgrade (Dencun) scheduled for deployment in the first quarter of 2024.
The Ethereum Cancun Upgrade is the next major upgrade following the Shanghai Upgrade (Shapella) in April 2023. In this hard fork upgrade, nine EIPs (Ethereum Improvement Proposals) will be implemented, including but not limited to:
EIP-1153: This proposal introduces two new opcodes to automatically clear certain data at the end of a transaction to help slightly reduce transaction costs (Gas fees).
EIP-4788: This upgrade allows Ethereum’s execution layer to directly access the block root of the beacon chain, improving the overall operation of the blockchain.
EIP-4844 (Proto-danksharding): Introduces a temporary data storage method to reduce the cost of storing transaction data, thereby lowering user Gas fees.
EIP-5656: Provides a new way to duplicate data in the EVM, making the process simpler and more economical.
EIP-6780: Modifies an opcode to only be invoked when the contract is created in the same transaction.
EIP-7044: Removes restrictions on the validity of validator exit information.
EIP-7045: Extends the time for including certain proofs in beacon chain blocks, improving network efficiency.
EIP-7514: Increases the maximum number of validators that can be activated per epoch.
EIP-7516: Introduces a new opcode to return specific fee information for the current block, improving price transparency and predictability.
Among them, EIP-4844 and EIP-1153 are the two main EIPs that can reduce on-chain transaction costs for the main network and all Ethereum layer 2 networks.
The Cancun Upgrade (along with the potential Ethereum spot ETF) is considered the main narrative to drive the rebound of ETH/BTC in the future. Based on a telephone conference held by Ethereum developers last week, the tentative timeline for the hard fork activation is as follows:
Goerli Testnet Hard Fork – January 17, 2024 – Epoch 231680
Sepolia Testnet Hard Fork – January 30, 2024 – Epoch 132608
Holesky Testnet Hard Fork – February 7, 2024 – Epoch 29696
If no bugs are found after the Holesky Testnet Hard Fork, the Ethereum mainnet is expected to undergo the Cancun Upgrade by late February to early March.