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Cryptocurrency update: ETH spike predicted, Goldman lead forecasts merger & UNI surges
In this cryptocurrency update, Goldman Sachs predicts big things ahead for digital currencies, ETH could rise with a new network upgrade, and UNI breaks into the cryptocurrency top ten.
Is ETH about to soar?
A change in the way ETH tokens are processed on the Ethereum blockchain could feed into higher prices for the crypto going forward.
A proposal, called EIP 1559, has been accepted by the network’s developers that will increase the scarcity of ETH tokens. Under the change, the platform will burn a small amount of Ether every time that the currency is used to pay gas fees on a transaction. Gas fees are small fees applied whenever a transaction is processed on the Ethereum blockchain.
As this process involves destroying ETH tokens, analysts believe the resulting reduction in supply will support the price of ETH. Less tokens, coupled with growing demand, means more scarcity, and could mean higher prices.
Higher demand comes from the fact the new proposal will also go someway towards standardising gas fees. At present, Ethereum users feel there is too much guesswork on gas fees. Many turn to external trackers to find out daily fee levels. With more clarity, more users could start using the Ethereum blockchain for their blockchain needs.
ETH has already made considerable gains across the last 12 months – even outpacing Bitcoin in terms of growth. This time last year, ETH was trading at around $200; now, it is over $1,700. In percentage terms, that’s growth of 750%, compared against Bitcoin’s 530%.
EIP 1559 is scheduled to go live in either July or August when it will be bundled into a wider Ethereum network upgrade. It’s possible that the crypto may enjoy further price increases in the run up to EIP 1559’s release and after too, should its implementation go smoothly.
Goldman digital lead says more cryptocurrency infrastructure mergers are coming
Matt McDermott, Global Head of Digital Assets for Goldman Sachs Global Markets Division, has said that banks and institutions like Goldman may be under more pressure to grow their crypto businesses, highlighting mergers and acquisitions as the way to do it.
Speak in a company podcast, McDermott said: “This is a fast-evolving landscape where the crypto incumbents have certainly made huge progress over the last couple of years. There is an expectation from clients now that the incumbent banks will develop their offerings to satisfy that demand. And so, certainly anticipate a certain amount of consolidation across that space.”
Goldman has already pledged to update its cryptocurrency trading desk offering and has stated it will start offering CME bitcoin futures and non-deliverables, in a bid to disseminate “Bitcoin content” to institutional clients.
Institutional support for BTC is rapidly expanding; from Elon Musk’s Tesla investing in $1.5bn of the crypto, to Deutsche Bank creating new digital currency assets and services. This is only a very small slice of the institutional-level support cryptos are beginning to enjoy. Expect a lot more in the future.
According to a recent Goldman Survey, 40% of Goldman’s institutional clients already have exposure to crypto, either through holding the asset directly, derivatives or securities products. A further 32% were most interested in prime brokerage for physical or spot to gain exposure to cryptocurrencies.
“Talking to clients, they’re much clearer on why they want to invest. Really what they’re interested in is broader market behaviour. And really identifying what are the most efficient ways for them to get exposure and to think about hedging,” McDermott said.
“In terms of kind of institutional demand, we have seen no signs of that abating,” he said.
UNI breaks into crypto top ten
UNI, the native token for decentralised exchange and app UniSwap, has enjoyed a rally in the last week.
According to Messari rankings, UNI is now the 8th largest cryptocurrency in the world by market cap. Following last week’s 50% price increase, UNI is worth a total of $17.7bn at the time of writing.
This continues a major spike observed across March 2021. Between March 4th and March 5th, UNI’s market cap grew from $8.8bn to $14.7bn. UNI is also now the only Decentralised Finance (deFi) application (dApp) token to make it into the top ten.
UNI is also ranked as the second-largest Ethereum-based asset currently in existence, with Tether Dollars (USDT) holding the place as the largest Ethereum-based asset in the world.
Record increases in UniSwap trading value is probably the key factor behind UNI’s surge. Each week in the month of February brought with it a new all-time high for trading volume on the exchange, ending the month with a record-breaking $31.9 billion in trading volume.
An upgrade to the UniSwap platform, “V3” is on its way too, which may have also contributed to the impressive market cap rise.