Cryptocurrency continues to garner the attention of investment professionals owing to its non-restrictive, permissionless distributed ledger system, incentive model, and decentralised governance that allows for quick decision-making and protocol upgrades. Bitcoin is by far the most prominent digital asset, and its market capitalization has surpassed $1 trillion, pushing past silver to become the world’s 8th most valuable property.
Ethereum is a notable opponent, even with less market capitalization and volume. It’s more than a digital currency – Ethereum is a decentralised computing network with smart contract functionality that lets developers create highly reliable apps.
2024 has been an exciting year for ETH, which has crossed over $4,000 and reached heights since January 2022. Price developments are hard, if not impossible, to predict because Ethereum is indissociable from the world of DeFi (decentralised finance); its scalability solutions and constant upgrades help strengthen its status as the leading platform for managing and growing digital assets. If DeFi does well, so does ETH.
It seemed like Ethereum was quickly going to reach $5,000 by the end of the year, but the world’s second-largest cryptocurrency fell in value after hitting the $4000 mark and is currently at the $3000 level. If the Ethereum prediction comes true, the value of the cryptocurrency may increase by 2030, and you can start selling your position once it reaches the price target range.
In May, The SEC Announced the Approval Of 8 Spot Ethereum ETFs to Be Listed and Traded on U.S. Exchanges
The U.S. Securities and Exchange Commission gave the green light to 8 spot Ethereum ETFs at the end of May, a move that came shortly after the approval of spot Bitcoin ETFs, which indicates the financial markets watchdog’s growing acceptance of cryptocurrency investments within the mainstream financial system, or TradFi. The fact that there’s a substantial, robust, and regulated futures market in Ethereum held sway in the decision to approve applications from BlackRock, Fidelity, Grayscale, VanEck, Franklin Templeton, Invesco Galaxy, ARK 21Shares, and Bitwise.
Additionally, staking features were removed from proposals apropos of the SEC’s concerns about the possible classification of staking as an unregistered security. As we all know, ETH relies on staking to guarantee the network’s security and reward users who participate in block production. Without staking rewards, spot ETFs fail to capitalise on what Ethereum has to offer, suggesting a lack of regulators’ understanding of the key features that set it apart from Bitcoin.
It’s no secret that the journey to spot Ethereum ETF approval has been long and tedious, full of unpleasant surprises. In the beginning, the U.S. financial markets watchdog was apprehensive of market manipulation and regulatory uncertainty, but regulatory developments and precedents for success, such as the approval of spot Bitcoin ETFs, made the SEC change its mind. Still, without staking, the financial products might struggle to attract investors, who might opt for crypto-native solutions.
All Investigations on The Ethereum Foundation Have Been Abandoned, But the SEC Continues to Pursue Ripple
The SEC finally ended its investigation into Ethereum 2.0, which was pending for a while, so it’s no longer building a case to declare ETH a security, as it did for similar blockchain projects, including Solana, Cardano, and Ripple. At one point, the U.S. financial markets watchdog even subpoenaed firms collaborating with the Ethereum Foundation, requiring them to provide documents and financial records concerning their interactions. The government agency won’t bring charges claiming that sales of ETH are securities transactions.
The legal battle between the SEC and Consensys, which has developed several core tools for the Ethereum ecosystem, including one of the best non-custodial wallets on the market, MetaMask, will most likely continue as the software company seeks regulatory clarity within the cryptocurrency sector. Moreover, Ripple Labs is still liable for hefty fines. The court granted the technology company a partial win via a summary judgement when Judge Analisa Torres ruled that sales of XRP to the public aren’t security transactions.
The end of the SEC’s investigation brings to a close a contentious chapter in Ethereum’s history and marks the beginning of a new era for developers, technology providers, and industry participants who’ve suffered because of regulatory overreach and inconsistent positions on ETH. The persistent threat of legislative overreach remains. Uniswap received a Wells notice and was accused of operating as an unregistered securities exchange, while Coinbase is vehemently disrupting the SEC’s characterization.
Pectra Is the Next Major Ethereum Upgrade, And It’s Expected to Be a Bigger Deal Than Dencun Was
The Dencun upgrade went live on March 13 without a hitch, causing transactions on Layer-2s to take a deep dive by implementing blobs, which don’t have any metadata associated with them. The next significant upgrade for Ethereum is Pectra – it’s a mix of improvements to the execution layer, referred to as Prague, and the consensus layer, namely Electra. It’ll be even more important than Dencun. Pectra is scheduled for the 4th quarter of 2024 or the 1st quarter of 2025, making the blockchain more flexible and optimised than ever before.
The Pectra upgrade comprises several upgrades, including but not limited to:
- EIP-2537: It adds a cryptographic primitive that makes it possible to get 120+ bits of security for multiexponential operations over the BLS12-381 curve. EIP-2537 introduced 9 new precompiles.
- EIP-2935: It’s a code change that provides benefits in terms of Verkle tree implementation, saving historical block hashes. Implementing EIP-2935 can facilitate new applications and optimise existing ones.
- EIP-6110: It decreases the delay between submitting deposit transactions on the execution layer and its processing on the consensus layer. Put simply, it reforms the Beacon Chain’s validator deposit mechanism and fixes many issues affecting ETH’s security and efficiency.
Concluding Thoughts
2024 isn’t over just yet, and it’ll be the most dynamic, impactful year in cryptocurrency. Ethereum seems to have entered a bottleneck period, and whether it’ll ultimately succeed depends on how you define success – throughput of tens of thousands or a user base of billions. The future price trajectory of ETH depends on the price trajectory of Bitcoin, so as long as the SEC doesn’t get involved, the cryptocurrency has a chance to reach $5,000 by 2025.
