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ETH/BTC Exchange Rate Breaks Low Again
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Due to the rapid rebound of Bitcoin, the ETH/BTC exchange rate has dropped below the 0.05 support that has been held for the past few months, standing at 0.0493 at the time of writing, approaching the previous low of 0.04908 in 2022.
In such a market environment, Ethereum seems to be less favored as an investment target by investors, with the only opportunity to reverse the situation being 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 opcode commands 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 direct access to block roots on the beacon chain, helping to improve 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 users’ Gas fees.
EIP-5656: Provides a new method to copy data in the EVM, making the process simpler and more economical.
EIP-6780: Modifies an opcode to only be called when creating a contract in the same transaction that created the contract.
EIP-7044: Removes restrictions on the validity of exit information for verifiers.
EIP-7045: Extends the time for including certain proofs in beacon chain blocks to improve network efficiency.
EIP-7514: Increases the maximum number of validators that can be activated in each epoch.
EIP-7516: Introduces a new opcode to return specific fee information for the current block to improve 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 mainnet and all Ethereum layer 2 networks.
The Cancun upgrade (along with the potential Ethereum spot ETF) is considered the main narrative to drive a rebound in ETH/BTC in the future. According to the 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 vulnerabilities are found after the Holesky Testnet Hard Fork, the Ethereum mainnet is expected to undergo the Cancun upgrade by late February to early March.