Ethereum co-founder Vitalik Buterin has offer a solution to temporarily resolve the scalability and transaction fee issues at Layer 2 before sharding is complete. New updates may be added to the Shanghai hard fork.

Vitalik Buterin – Co-founder of Ethereum

Investors increase ETH price ahead of new updates

The Ethereum development roadmap is running non-stop. Ethereum co-founder Vitalik Buterin proposed a new update to provide instant Layer 2 scaling without sharding.

Rollups or Layer 2 chains inherit the security, decentralization, and liquidity of the Ethereum network. Early-stage rollups like Optimism, Arbitrum, and StarkNet await further optimization in 2022.

Buterin proposed a “blob-bearer transaction” that would reduce fees by a factor of five or more by the end of 2022.

Ethereum Layer 1 can still charge high fees, but zero-knowledge (zk) rollups and greater scalability can offer the most affordable fees for users. In the end, users will just use zk-rollups instead of directly interacting with the Ethereum network.

Low transaction costs and higher scalability should improve investor prospects for ETH. CoinShares, a capital markets firm, recently surveyed digital asset fund managers every two months. The survey results show improved investor sentiment towards Bitcoin and ETH.

ETH price 4 hour chart | Source: Trade View

The report shows a fundamental correlation between investor sentiment and digital asset allocation. Compared to altcoins like DOT, ADA, and SOL, the relatively larger allocations to ETH come with a bullish outlook on price potential.

“The attribution to digital assets reflects a growth outlook where allocations to larger coins (BTC, ETH) are slightly higher than altcoins.”

Analysts have assessed ETH’s trend and found that the altcoin is at a crucial level.

Anonymous Twitter account for altcoin Sherpa believes ETH is likely to return to the lows. However, the price maintains a bullish market structure on the 4-hour weekly chart and 3,000 is the key point.

$ETH: This is not how soils are generally formed; I think a return to the lows is (eventually) likely. Apart from that, the price has still maintained a bullish market structure in the 4hw. HHS/HL’s. Be careful when approaching a spooky area in the 3000s. #Ether $ETHUSD pic.twitter.com/9KoAwUnsM2

— Altcoin Sherpa (@AltcoinSherpa) February 4, 2022

“ETH: In general, soils don’t form that way. I think the price still has a chance to go back to the lows at the end. Other than that, the price is maintaining a bullish market structure on the 4-hour weekly chart. Higher peaks and valleys. Beware as you approach the dreaded $3,000 zone.”

Other analysts believe ETH bears are desperate as the altcoin nears $3,500.

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