Ethereum Might Drop After the Imminent Hard Fork

Ethereum Might Drop After the Imminent Hard Fork

The market behaves in a similar way whenever there is an Ethereum hard fork incoming, a research by cryptocurrency exchange Gate.io showed. Generally, the time before the fork will see ETH price increasing, peaking at the time of the fork, and then correcting “to restore rationality after a cooling-off period,” according to the paper.

The paper, co-authored by Jill Chow, Colin Bao, and Chloe Luo of the Gate.io research team, clarifies that it only considers the price itself before and after the hard fork, but no policy, subjective or market factors, as well as no other uncontrollable conditions. What proved that Ethereum has an effect on the wider market was the infamous DAO hack in 2016, which caused instability throughout the market until the announcement of a hard fork, which led the prices back into the green.

Hard forks that improve the protocol and help Ethereum as a project to move in a better direction, usually cause a greater rise in price. Based on historical market performance around the time of an Ethereum hard fork, the market fluctuations are best summarized in three phases:

  1. Before the hard fork, the price is usually at a rise;
  2. At the time of the hard fork – as well as shortly before and after – the price peaks, representing a short stage of uncertainty;
  3. Following the hard fork, the price of Ethereum usually corrects at different levels.
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