ETH/USD Price Analysis: Ethereum’s “Thirdening” Approaches

Ethereum’s trading range narrowed on Tuesday, as attention shifted to the keenly awaited Constantinople upgrade anticipated in the next 36 hours. The hard fork, also known as the “thirdening” for reducing the amount of new ETH released into circulation, is expected to bring about much needed technical changes to the world’s third-largest blockchain.

ETH/USD Update

Ether’s price fluctuated between $127-$131 on Tuesday, and currently resides at the lower end of that range. At the time of writing, ETH/USD was trading at $127.56, down 1.4% over the past 24 hours. During the previous session, the cryptocurrency gained more than 10% in the span of one hour, likely in response to bitcoin’s sudden move higher. More on that story can be found here: Crypto Markets Swing Higher as Bitcoin Climbs Above $3,700.

The sudden breakout alleviated the risk of a fast move back toward $100, which appeared likely at the start of the week, according to the daily technical chart for Jan. 14. As it currently stands, there isn’t much in the way of resistance until $160, a previously difficult region to penetrate for the bulls. Although ETH has experienced oversized moves relative to the broader market in the last month or so, it’s more likely to trade in lockstep with its peers now that the Constantinople supply crunch has faded.

Ethereum continues to hold the third spot both in terms of market capitalization and trading volumes. In the market cap rankings, it trails XRP by roughly $200 million. Its daily trade volumes reached $2.7 billion on Tuesday for a 30-day total of $81.4 billion, according to CoinMarketCap. Only bitcoin and Tether (USDT) are more actively traded.

Constantinople Upgrade: Where We Stand

Constantinople is scheduled to go live at block 7,080,000, though pinpointing an exact moment for a hard fork is never easy. Hacked previously reported that the upgrade would likely fall between Jan. 14-18. A countdown provided by Amerdata suggests that the block confirmation will occur just before midnight on Wednesday, Jan. 16.

The looking hard fork will implement five Ethereum Improvement Proposals (EIP), which impact everything from block rewards to scalability. Proposal EIP 1234 will adjust the size of block rewards to 2 ETH from 3 ETH – hence, the “thirdening.” Back in 2017, Ethereum implemented the Byzantium hard fork, which lowered the block reward to 3 ETH from 5 ETH previously. Unlike bitcoin, which halves the block rewards every 210,000 blocks, Ethereum doesn’t have an upper ceiling on its circulation. That being said, lowering block rewards is intended to reduce inflation by lowering the supply of newly created coins.

Once Constantinople is live, Ethereum’s inflation rate will fall to 4.8% from the current rate of 7.7%. The following chart courtesy of Consensys showcases the impact of block rewards on ETH supply and overall inflation:

As of Jan. 12, only 16.4% of Ethereum nodes were upgraded ahead of the hard fork.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi