Investors are bracing for increased volatility in the days ahead as Ethereum’s (ETH) “Pectra Upgrade” is scheduled to go live on May 7.
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The upgrade will improve the scalability of the Ethereum network and is eagerly anticipated by fans of the cryptocurrency. However, the upgrade may also lead to greater volatility in the near term, say analysts and traders.
Many traders see the volatility as a bullish indicator and expect the price of ETH to ultimately rise in May following the successful completion of the Pectra upgrade. Pectra should improve the Ethereum blockchain’s scalability and validator operations. It’s an upgrade that crypto enthusiasts have been waiting on for more than a year.
Scaling and Validations
The May 7 upgrade will greatly increase the maximum Ethereum a validator can stake from 32 ETH currently to 2,048. Pectra will also begin the transition of Ethereum to the “EVM Object Format (EOF),” a new structure designed to make smart contracts more efficient.
Ultimately, the upgrade should reinforce Ethereum’s role as a data availability layer and strengthen its scaling, say analysts. Non-fungible tokens (NFTs) and blockchain games could also benefit from the improvements achieved from the Pectra Upgrade.
ETH is currently trading right around $1,800, having declined 46% this year.
Is ETH a Buy?
Most Wall Street analysts don’t offer price targets on Ethereum, so instead we’ll look at the cryptocurrency’s three-month performance. As one can see in the chart below, the price of ETH has decreased 33% over the last 12 weeks.
