Ethereum buying starts, two catalysts will come in January

Source: Golden Ten Data

Ethereum (ETH) prices jumped 6% on Wednesday, as investors bought the cryptocurrency ahead of a key upward catalyst expected in January. Solana (SOL), one of the best-performing cryptocurrencies this year, rose 2% yesterday. Needham analyst John Todaro said: "We believe this is due to... backflow from other projects into the Ethereum ecosystem, So far, these projects have outperformed Ethereum. …Tokens like Solana and Avax have outperformed ETH, which is playing catch-up in the rotation."

Ethereum lags behind SOL throughout 2023. Ethereum is up about 15% so far this month, while the SOL token is up 82%. Ethereum is up 95% so far this year, while SOL has surged more than 980%.

Matt Maximo, senior research analyst at Grayscale Investments, said that Ethereum’s rise on Wednesday showed that “the market has finally turned to ETH as the center trading, although this may not fully materialize until a U.S. spot Bitcoin ETF receives appropriate regulatory approval." He further added,

"Ethereum's on-chain activity is still very strong, so I think it's not an 'if' but a 'when' Ethereum will catch up."

Investors are currently paying attention to two key events in January. The first is Ethereum’s “Dencun (Cancun) Upgrade”, which is tentatively scheduled for January 17th as “Dencun” The date of the first test network deployment for the upgrade. This highly anticipated development will revolutionize Ethereum by increasing data storage capabilities through a new process called "proto-danksharding" while reducing the costs associated with Ethereum's second layer solutions.

The "Dencun" upgrade was originally scheduled for the last quarter of 2023, but was postponed to 2024 due to the engineering complexities involved.

Tim Beiko, head of protocol support at the Ethereum Foundation, pointed out that the date is not set in stone and may change if major issues arise. The team aims to publish a blog post detailing the fork during the week of January 8, 2024, giving stakeholders a week to prepare updates.

Dencun will be Ethereum’s first major upgrade since “Shapella” earlier this year, which in itself is an important milestone that makes staking >ETH can be extracted from the blockchain.

In addition, investors have been paying close attention to the progress of the U.S. Securities and Exchange Commission (SEC)’s possible approval of a Bitcoin spot ETF, a decision that is widely expected to be made in January.

Needham analyst Todaro said that some investors are optimistic that if approved, this will also bode well for the potential of the Ethereum spot ETF.