The impact of Ethereum 2.0 on the price of ETH

What could be the impact on the ETH price of the release of Ethereum 2.0?

After the release of the ETH 2.0 deposit contract the start of the procedure that will lead to the final launch of the second version of the protocol seems to be within reach, so this is a question that many investors are asking themselves.

First of all, it must be said that the news of the release of the deposit contract seems to have had an immediate positive impact on the price of ETH.

Yesterday it was worth $383, but within half an hour it had already risen to $397, and then further increased to over $400, with a gain of over 6% in about an hour and a half.

Moreover, since the end of October, the price had not risen above $400.

In addition, this increase yesterday also made ETH’s dominance rise, revealing that it was not related to the simultaneous increase in BTC’s value.

Before the spike that brought the Crypto Method price back above $400, ETH dominance was 10.9%, while afterwards it had risen to 11.3%.

However, it should be noted that, with today’s increase in BTC’s price, ETH dominance has returned to 11%, while for example a month ago it was 11.7%, while on 2 September it reached a temporary peak of 13.7%.

Ethereum 2.0 will increase the price of ETH
This scenario seems to suggest that the individual steps forward in the evolution of the Ethereum 2.0 project are able to influence the price of ETH, but only for short moments, and not substantially, while other phenomena, such as the DeFi boom, are able to have a more consistent and more lasting impact over time, although always of relatively short duration.

A recent research by Binance reveals, however, that a more complex and structured discourse should be made in particular for the derivatives market.

According to this research, not only phenomena such as the DeFi boom can be significant variables as far as the bullish sentiment on ETH is concerned, but the upgrade to Ethereum 2.0 could also be significant in the long run, helping to build a „fundamentally solid“ narrative on this project.

This could lead to an increase in investors who will gain exposure to ETHs using derivative products during 2020.

In addition, with the next move to Proof-of-Stake, many investors will have an incentive to keep their ETHs immobilised to cash their staking premiums, which will presumably reduce token offerings in the market. As demand for ETHs continues to grow, this could lead to a price increase.

However, the timing is still lacking. This is a phenomenon that should occur in the medium term, and not in the short term, while the release dates of the new features are not yet known.