February 1 marked a crucial milestone for ethereum (ETH) developers as a new testnet, Zhejiang, thrown out. What is it and how it works?
The Zhejiang update allows users to start testing the next major update to the protocol, the Shanghai hard fork, which will be released in March this year.
Ethereum Enhancement Proposal-4895, or Staked Ether Withdrawals, proposed as part of the upcoming Shanghai update, will allow users to withdraw their staked Ether assets and rewards.
After the success of the Ethereum Merge upgrade in September 2022, users were able to stake their ETH on the Proof-of-Stake (PoS) network. However, your funds remain locked until the patch goes live.
Creating a testnet that mirrors the main blockchain allows developers and users to test updates and applications in a low-risk environment before going live.
However, the new testnet does not allow users to test any withdrawal features. They will arrive six days later with updates to the Shanghai and Capella testnets, though users can still practice depositing in validators and get a feel for how the UI will work.
How will Shanghai affect the various stakeholders?
The Ethereum community has long been waiting for the possibility of withdrawing the ether staked, and now, with the upcoming Shanghai hard fork, their wishes may finally come true.
With 16,341,257 ETH currently staked on the Beacon Chain, representing almost 14% of the total circulating supply, the Shanghai hard fork will have a major impact on the cryptocurrency ecosystem.
In 2022, JPMorgan foretold that Coinbase could capitalize on the upcoming upgrades, potentially earning an additional $225 million to $545 million in annual revenue. Additionally, the improved liquidity of ETH staking should increase demand for ETH as users will be able to stake directly with ethereum.
This could push the price of ETH higher, as better conditions for participation and liquidity create a more favorable market equilibrium.
With the potential to influence the value of ETH, the Zhejiang testnet will be closely monitored as billions of dollars are expected to be managed from ETH staking activity.
What affects the price of ethereum
The crypto market received good news along with the Zhejiang testnet, as the Federal Reserve (Fed), at its meeting on February 1, granted a quarter of a percentage point increase to the key short-term interest rate of the 4.5% to 4.75%, the highest. in decades.
This move, which the market expected, was made to curb record inflation that had been affecting the value of stocks, stocks, and crypto assets.
“I think for the first time now we can say that the disinflationary process has started.”
Fed Chairman Jeremy Powell
Ethereum reacted quite positively to the announcement – it shot up from $1,566 to $1,689 in a couple of hours. ETH is trading at $1,666, an increase of 5.62% from the previous 24 hours.
Crypto Market Forecast
The rise of cryptocurrencies like ether has been a source of fascination and confusion for many.
However, recent economic changes in the US and global markets have highlighted the correlation between ETH prices and traditional markets.
In the wake of currency moves and economic changes from the Federal Reserve, ETH and other cryptocurrencies have seen bullish momentum. This trend is expected to continue in the coming months.
What is clear is that the world of cryptocurrencies is more relevant than ever and global financial markets are beginning to take notice.
With the US economy heavily influenced by the performance of the Federal Reserve, the potential for ETH to impact macroeconomic conditions is remarkable.
Furthermore, the analysis suggests that the current “hype” related to ETH is creating an optimistic environment and could result in further appreciation in the longer term.
The future of the crypto markets remains uncertain, but it is clearly becoming more and more integrated into the global economic landscape.
With ETH prices increasingly connected to traditional markets, it is now more important than ever to keep an eye on the changing relationship between cryptocurrency prices and the global economy.