The impact of Ethereum upgrade on ETH price: short-term volatility and long-term value

The impact of Ethereum upgrade on ETH price has two aspects: short-term fluctuations and long-term value. In the short term, market expectations before upgrading will affect price rise and fall, technical problems during the upgrade process may lead to price plummeting, and after upgrading, the phenomenon of "selling expectations and buying facts" may occur. In the long run, successful upgrades will improve network performance, such as increasing throughput and reducing transaction fees, and optimizing economic models, such as achieving deflation, thereby increasing the scarcity of ETH and supporting price increases.

The impact of Ethereum upgrade on ETH prices is as follows in terms of short-term fluctuations and long-term value:

Short-term fluctuations

• Before upgrading: Market expectations will trigger investors to make advance arrangements and drive prices to rise. For example, after the news of Pectra upgrade was announced, Ethereum prices rose. However, if negative news such as upgrade delays or testnet failures occurs, it will cause market concerns and lead to price declines.
• Update: If the upgrade goes smoothly, the price may remain at a high level or continue to rise; if there are technical problems or loopholes, it will cause market panic and investors sell in large quantities, which will lead to a price plummeting.
• After upgrading: "sell expectations, buy facts" effect may occur. If the actual effect does not meet expectations, investors will make a profit and the price will fall by 1. But if the upgrade can solve the existing problems, it may also attract more capital inflows and drive prices up.

Long-term value

• Technical advantages enhancement: Upgrades can improve network performance, such as the promotion of sharding technology can increase throughput, reduce transaction fees, attract more developers and users, increase ETH demand, and support price increases.
• Economic model optimization: For example, after the "merger" upgrade, ETH enters the deflation stage, and its scarcity increases, which supports prices in the long run.
• Application Ecosystem Expansion: Ethereum is the main platform for DeFi and NFT, and has been upgraded to provide better support for the development of decentralized finance, digital identity verification, metaverse and other fields. As the ecosystem continues to expand, the long-term value of ETH will continue to increase.

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