Bitcoin Price Ready to Push Above Key Resistance to Hit $10,000

Bitcoin price is managing to hold $8,800 support, which means the recent upward trend can continue to $9.4K and $10K targets next.

Bitcoin (BTC) price sees a tremendous start of the year as it surged 25% year-to-date. Not only has Bitcoin been flourishing over the past few weeks, but altcoins have also been following along. Will Bitcoin continue the upward momentum, or is it a temporary top close?

Crypto market daily performance. Source: Coin360

Crypto market daily performance. Source: Coin360

Bitcoin breaks the 7-month downtrend

The price of Bitcoin broke through the downtrend a few weeks ago, which marked the possible end of the downwards pressure. The slight test of $7,600 confirmed this breakout, after which price continued to rally towards $9,000.

BTC USDT 12-hour chart. Source: TradingView

BTC USDT 12-hour chart. Source: TradingView

The price of Bitcoin broke above $8,200 and rallied towards $9,000. This level is currently providing a barrier to go through and is the next resistance.

BTC USDT 4-hour chart. Source: TradingView

BTC USDT 4-hour chart. Source: TradingView

The 4-hour chart is showing a similar move upwards. Remarkably, the $8,600 level instantly flipped to become support in the past few days, after which the price of Bitcoin continued to rally towards $9,000.

The occurrence of a possible bearish divergence is currently showing up on the charts. However, to confirm this bearish divergence, the price of Bitcoin needs to drop below $8,800.

But, $8,800 is currently holding, and the price has been moving in a tight range between $8,800 and $9,000. Thus, a breakout in the coming days looks likely. The question remains to which side this breakout will happen and what are the targets?

Total market capitalization breaks downtrend too

The total market capitalization has also broken the downtrend upwards and is currently hovering around $248 billion.

Total market capitalization cryptocurrency chart. Source: TradingView

Total market capitalization cryptocurrency chart. Source: TradingView

As the recent article showed, the next resistance is at $247-248 billion. The green zone at $195 billion became support, after which price continued to rally. A similar flip occurred at $207 billion, which led to the breakout of the downtrend.

The next resistance shows at $247-248 billion (our current price level) as that level supported during the summer period of 2019. This level should typically be where traders who are anticipating a breakdown to short or sell their positions. Breaking through this level would put the next targets at $268 and $350 billion.

Total market capitalization cryptocurrency 3-day chart. Source: TradingView

Total market capitalization cryptocurrency 3-day chart. Source: TradingView

The total market capitalization chart often shows a brighter view than the Bitcoin chart alone. The chart shows that the market capitalization bounced off a significant trendline. This trendline could define the support and trend for the coming years.

Aside from that, the $173 billion levels showed support and marked a bottom, after which the market capitalization rallied to the next resistance of $250 billion as discussed above. A breakthrough would generally lead to the continuation of this trend towards $350 billion.

Altcoin market capitalization looks identical to February 2019

Total altcoin market capitalization. Source: TradingView

Total altcoin market capitalization. Source: TradingView

The altcoin market capitalization is showing similarities with February 2019. The total altcoin market capitalization hovered below the support of $48 billion in that period, after which the breakout led to a surge of 190% in the months after.

A similar structure is shown in the recent chart. The total market capitalization had support at $52 billion, after which a break and flip of $58 billion caused a rally to the next resistance. The next resistance is the price level of $80 billion, where the current altcoin market capitalization is hovering.

If the altcoin market capitalization breaks through this zone, the next targets are found at $92 billion and $130 billion, which would mean that this market cap is at the same level as it was during the summer of 2019.

Bitcoin Dominance on the edge of breaking down

Bitcoin dominance chart. Source: TradingView

Bitcoin dominance chart. Source: TradingView

The chart of the Bitcoin dominance is showing signs of a potential breakdown. If the dominance of Bitcoin drops below 67%, a continuation of that drop towards 60% is likely to occur. Such a dropdown would lead altcoins to outperform Bitcoin.

The top of the Bitcoin dominance chart is displaying bearish divergences, which usually means a trend reversal. Similar signs were shown at the top in September 2018.

The bullish scenario for Bitcoin

BTC USD bullish scenario. Source: TradingView

BTC USD bullish scenario. Source: TradingView

The momentum is currently upwards, so the bullish scenario is likely. Based on the recent price movements, holding $8,800 is essential for continuation towards the upside.

If $8,800 holds as support, a breakthrough of the $9,000 level is likely to occur. The next resistance levels which I’m targeting are $9,400 and $10,000.

Overall, Bitcoin started to rally since $6,400, so the upwards continuation will be stopped at some point to consolidate. That’s the main thing I’m expecting in the coming weeks from Bitcoin. If Bitcoin breaks upwards again, it’s most likely to start ranging between $9,000-$10,000 for some time in preparation for the next push upwards.

Where do we establish that range? At this point, it’s not certain as we don’t have full confirmation of any short-term trend reversal, and the price is still looking to push upwards. If the price of Bitcoin breaks through $10,000, then FOMO (fear of missing out) could come back into the market, triggering the price to go towards $11,600.

The bearish scenario for Bitcoin

BTC USD bearish scenario. Source: TradingView

BTC USD bearish scenario. Source: TradingView

As stated previously, bearish scenarios are only bearish scenarios for short-term purposes, where the price generally needs to establish a range. Usually, bouncing from a new support level would lead towards a continuation in the trend, which has been upwards over the past weeks.

Resistances are found at $9,000 and $9,400. If the price of Bitcoin can’t break through $9,000 and drops below $8,800, bearish divergences on short timeframes confirm a short-term trend reversal and the main target would then become $8,250. If that doesn’t hold, the next destination for support is $7,600.

A similar perspective is given if $9,400 doesn’t break upwards (through which Bitcoin makes a blow-off top). Targets for the retracement would then still be $8,250 and $7,600 as the main support zones.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

These Simple Factors Suggest Ethereum Will Soon See a Major Bull Movement

Ethereum has been outperforming Bitcoin over the past 24-hours, posting a massive upwards movement that has allowed it to secure a position within the $170 region, which marks a notable climb from ETH’s recent lows around $120 that were set in the final weeks of 2019
Analysts are now noting that they anticipate Ethereum’s upwards momentum to continue strong in the coming days and weeks, with a few key technical factors enhancing the cryptocurrency’s near-term potential.
Ethereum Breaks Out of Bullish Pennant as Analyst Watch for Further Upside
At the time of writing, Ethereum is trading up just under 3% at its current price of $174, which marks a notable climb from its weekly lows of $144 and a slight climb from its daily lows of $167.
Ethereum is also outperforming Bitcoin at the moment by roughly 2.5%, and this trend may continue strong in the near-term as the crypto begins building incredible technical strength.
One such example of a bullish technical formation that ETH is currently breaking out of is the bullish pennant that it had formed over a multi-day time frame, with its horizontal boundary existing at 0.0195, which is just a hair beneath its current price.
“ETH looks hungry,” Jonny Moe, a popular cryptocurrency analyst on Twitter, explained in a tweet from yesterday evening while pointing to the aforementioned technical formation.

$ETH looks hungry pic.twitter.com/mfD0FXAXFF
— Jonny Moe (@JonnyMoeTrades) January 18, 2020

If Ethereum is able to sustain its break above the upper boundary of this formation, it could soon see significantly further upside.
ETH Is Close to Breaking Above a Key Multi-Year Resistance
Another factor that could provide Ethereum with some near-term upside is the fact that it is currently on the cusp of breaking above a key multi-year resistance that has been guiding its price lower since early-2018.
Teddy, another popular crypto analyst on Twitter, has been referencing this trendline as a source of his macro-ETH bearishness for quite a while, but he is now noting that if Ethereum closes above this line on its weekly candle chart, he will grow bullish on the crypto.
“Historically I have been bearish, as I was looking at lowest support for a mega-galactic-long entry. However, if we were to close WEEKLY above a 2 year resistance I will start to long at long SWING entries on retraces – till then a bit skeptical,” he explained.

#ETHEREUM | $ETH
Historically I have been bearish, as I was looking at lowest support for a mega-galactic-long entry (🚀)
__
However, if we were to close WEEKLY above a 2 year resistance I will start to long at long SWING entries on retraces – till then a bit sceptical. pic.twitter.com/shQLOH0GTW
— TEDDY ⛓💡 (@teddycleps) January 18, 2020

How Ethereum reacts to this level in the coming few days could provide significant intelligence as to where it will trend throughout the rest of 2020.
Featured image from Shutterstock. The post appeared first on NewsBTC.

What’s Next For Bitcoin’s Price? Analyst Who Predicted 35% Crash Says This

Earlier this year, in late-September, prominent Bitcoin analyst Filb Filb posted this chart below, showing that he expects for BTC to jump by dozens of percent to near $10,000, then collapse by 35% to the low-$6,000s to interact with the “miners bottom range.”
While some laughed this off as pure bearish sentiment at the time, Filb Filb’s prediction was proven to be nearly 100% accurate, with Bitcoin surging past $10,000 in a temporary vertical relief rally, then crashing the mid-$6,000s just earlier this month.
He managed to predict Bitcoin’s trajectory months in advance, something quite difficult for any trader due this market’s volatility.

The same analyst is back again, issuing his latest forecast for the leading cryptocurrency.
Related Reading: Ethereum’s Price is “Convincingly Bearish”: Here’s What Comes After 20% Week
Bitcoin to Hit $9,555 Soon
Filb Filb recently noted that Bitcoin is preparing to make a raid on the previous resistance level of $9,555, noting that this is where the price of the cryptocurrency topped in October and early-November in the wake of the now-infamous 40% “China pump.”
BTC reaching this level, which would satisfy textbook market trends of assets visiting support and resistance levels multiple times before establishing a direction, would require it to rally by 7% from the current price of $8,850.

Previous weekly resistance @$9555 – Bring it home $btc. pic.twitter.com/kKxlyvJ6V0
— fil₿fil₿ (@filbfilb) January 18, 2020

Not the Only Bull
Filb Filb isn’t the only prominent analyst who is bullish on Bitcoin.
Aside from Filb Filb, there are few traders that have been as accurate on BTC as Dave the Wave. In the middle of 2019, he claimed that he expects for BTC to drop by dozens of percent to bottom in the mid-$6,000s, which it did months later. Mind you, he made this harrowing prediction when investors were high on life, claiming that $20,000 and beyond was imminent.
Related Reading: Research Firm: 3 Use Cases Could Send Bitcoin To $1 Trillion
Dave recently issued his next prediction, saying that BTC is preparing to break higher than it already has, drawing attention to the below chart which shows BTC is trading in a clear uptrend. Per his analysis, the cryptocurrency’s price will likely surge another 32 percent to $11,500 by the middle of February—just four weeks away.

Pennant starting to look more likely with price staying high here. Freebie from my alts page… pic.twitter.com/IZQAJIrgf0
— dave the wave (@davthewave) January 17, 2020

Backing this prediction, Dave looked to a confluence of factors:

Bitcoin recently broke above a descending channel that has constrained price action for more than six months, marking a large win for bulls.
BTC rallying to $11,500 would satisfy a historical chart pattern.
The weekly Moving Average Convergence Divergence (MACD) is starting to trend higher once again, which was a signal seen in 2015/2016 as BTC moved from a bear market to bull.

Related Reading: Bitcoin Price Signal That Preceded 4,000% Rally Forms Again, and It’s Huge for BTC
Featured Image from Shutterstock The post appeared first on NewsBTC.

‘Weak Hands Are Out’ — Trader Who Called $20K Bitcoin Top Calls Bottom

Progress in 2020 has turned Bitcoin bullish, says Brandt, who now recommends potential investors hold up to 20% of their portfolio in the cryptocurrency.

Bitcoin (BTC) investors who are waiting for a price dip to even $6,000 have “missed” their opportunity already, veteran trader Peter Brandt says.

In a market discussion with Cointelegraph on Jan. 17, the 40-year market stalwart said that contrary to what some believe, BTC/USD has already hit its floor.

Brandt: “The weak hands are out”

“They all now want to sit and buy a break back to $6,000 or $5,000 and they’ve missed the bottom — and during that bottom, I think you had a lot of people accumulate with strong hands,” he summarized.

Brandt continued:

“The weak hands are out; the strong hands own it.”

As a long-time Bitcoin advocate, Brandt was continuing a bullish streak he began on social media earlier this month.

As Cointelegraph reported, his personal sentiment has undergone a change since late 2019 — as recently as December, he had warned there remained a chance for Bitcoin to put in lower lows in 2020 thanks to novice investors he described as “cryptocultists.”

In early 2018, one month after Bitcoin reached its all-time highs of $20,000, Brandt warned markets would not be going any higher, and that an 80% retracement was likely. BTC/USD hit local lows of $3,100 — 84.5% lower — a year later.

Now, however, the danger has subsided, Brandt suggested, in comments echoed in the discussion by fellow trader Alessio Rastani.

“Anybody” should have 10-20% BTC portfolio

“I think anybody who is interested in what Bitcoin has to offer has to have at least 10-20% of an ownership position relative to the capital that they could commit to Bitcoin in a bigger perspective,” he advised.

Bitcoin has sealed monthly gains of around 35%, with 2020 progress alone at 25%. Markets reached local highs of $9,000 on Friday, before encountering resistance, which coincides with the 200-day moving average price, something which has historically stifled bullish progress.

The latest statistics meanwhile suggest that interest in Bitcoin extends beyond lay consumers — volume surges on futures markets signal institutional commitment as well, commentators have said.

Cointelegraph regularly produces Market Discussions, Interviews and Documentaries. To watch more of our videos, subscribe to Cointelegraph’s YouTube channel.

Why Has Bitcoin SV (BSV) Plunged By 40% From Its $450 Peak?

Aside from Bitcoin, there’s almost no other crypto asset that has been talked about as much as the Satoshi Vision fork (BSV) over the past week. The past seven days for the now-fifth largest cryptocurrency by market capitalization have been rather tumultuous, with the cryptocurrency starting the week off flat to explode higher from just above double digits to a high of $440, representing a nearly 200% rally in three days.
But as fast as the asset has rallied, so too has it collapsed. As of the time of writing this, the third-largest chain with “Bitcoin” in its name is down 18% in the past 24 hours, a period during which BTC, Ethereum, and other market leaders gained 4%, sometimes more.
Related Reading: Research Firm: 3 Use Cases Could Send Bitcoin To $1 Trillion
Bitcoin SV Has Crashed 40% From Local Peak; Why So?
Over the past few days, since hitting $440, Bitcoin SV has fallen off a proverbial cliff, crashing almost as fast as it rallied. As of the time of writing this article, BSV is trading 40% lower than its $440 peak, changing hands for $264.

This begs the question — what led to this oh so precipitous drop?
Related Reading: Ethereum’s Price is “Convincingly Bearish”: Here’s What Comes After 20% Week
Well, the crash coincides with news that Craig S. Wright, the primary proponent of BSV and a coder and entpreneur who claims to be Satoshi Nakamoto, does not currently have access to a Bitcoin stash he purports to have, which BSV proponents have said he will use to dump BTC and promote their version of the chain.
Former NewsBTC writer Tim Copeland confirmed in a report for Decrypt Media, which he edits, that Wright does not have the private keys that can be used to access the billions of dollars worth of BTC that Satoshi Nakamoto most likely mined when he was one of the only Bitcoin users. “The file that he’s received did not include private keys,” Andres Rivero, partner at Rivero Mestre law firm, told Decrypt.
With rumors that Wright has access to the keys seemingly coinciding with much of the buying pressure in the last week, this report, along with other observations that Wright may not have the keys he purports to have at the moment, could have contributed to BSV’s decline.
Not to mention, Nicholas Merten, a popular cryptocurrency analyst and the founder of the YouTube channel DataDash, argued that the recent surge in the altcoin may be one based on questionable market activity, and thus may not last:

Ignore the price moves of $BSV. Only $35.6M of volume is from exchanges open to US traders. The other 99.4% of daily volume is made up of mainly no-name exchanges and known wash trading exchanges that still deceive this space. They can basically dictate a false price.
— Nicholas Merten (@Nicholas_Merten) January 14, 2020

Related Reading: Bitcoin Price Signal That Preceded 4,000% Rally Forms Again, and It’s Huge for BTC
Others have echoed this, with Saunders of Nugget’s News arguing that  “History has not been kind to those who acted on emotion rather than rationale,” noting that the recent rally in the popular altcoin is seemingly one based on emotion and not on rational thought, at least not yet.
Featured Image from Shutterstock The post appeared first on NewsBTC.

Bitcoin SV Drops 40% as Lawyer Admits Craig Wright Has No Private Keys

The altcoin Wright claims is the “real” Bitcoin has lost investors who bought on Jan. 15 almost half their money.

Controversial altcoin Bitcoin SV (BSV) has crashed 17% overnight after its main proponent failed to prove he has access to $9 billion in Bitcoin (BTC).

Data from Coin360 and Cointelegraph Markets confirmed a difficult 24 hours for BSV holders, who saw huge gains over the past week as Craig Wright’s court case delivered fresh revelations. 

Wright evidence “did not include” BTC keys

After Wright had promised to prove he was the controller of funds linked to Bitcoin creator Satoshi Nakamoto, BSV — the hard fork of BTC he claims is the “real” Bitcoin — shot up to all-time highs of $436.

In the event, Wright disappointed. After what he described as a “bonded courier” delivered evidence in the multimillion-dollar legal battle to confirm his identity, Wright’s lawyer subsequently confirmed it contained no private key information at all.

“The file that he’s received did not include private keys,” Andres Rivero told cryptocurrency news outlet Decrypt on Jan. 18.

Bitcoin SV 7-day price chart.

Bitcoin SV 7-day price chart. Source: Coin360

Even before the information went public, BSV began descending from its highs to hit press-time levels of $262 — 40% below its Jan. 15 peak.

Bitcoin Cash reclaims market cap

While BTC has sustained higher levels in recent days and weeks, BSV’s fortunes now appear inextricably tied to developments with Wright. 

As Cointelegraph reported, the events triggered derision among online commentators, with memes involving fake BTC transactions circulating on social media. 

BSV has now lost the position of fourth-largest cryptocurrency by market cap, which it briefly took from fellow hard fork, Bitcoin Cash (BCH). By contrast, over the past 24 hours, BCH/USD gained 7%.

In the top twenty, only Dash (DASH) matched BSV for losses, shedding 15% after likewise experiencing sudden gains in January.

New Analysis Finds That Mondays Are the Best Days to Buy Bitcoin

Bitcoin returns on investment differ based on what day of the week BTC was bought as well as other factors such as volatility and market cycle conditions.

This week saw Bitcoin price (BTC) hitting the $9,000 barrier amid the launch of CME Bitcoin options and Plaid’s acquisition by Visa, reaching a record price for the last two months. 

Bitcoin’s 27% price gain since the beginning of the year along with the future bullish scenarios laid down by investors may attract new crypto holders. But since BTC/USD is traded 24/7, new investors may be wondering: is there a difference between investing on a particular day of the week?

Crypto market data, 1-day performance

Figure 1. Crypto market data, 1-day performance. Source: Coin360

The basis of a difference in a day of a week returns comes from traditional stock markets. It has been shown that stock returns on Mondays are, on average, negative. This is called the Weekend Effect. One explanation is that the effects on a particular stock will only be felt on Monday since the market is closed during the weekend. However, the cryptocurrency market is always open: Could we expect the same behavior on Mondays for Bitcoin?

Bitcoin weekly trend in 2019 

Analyzing Bitcoin returns from the beginning of 2019 until Jan. 13, 2020, data shows that Fridays present the highest average return across the days of the week at 1.1%. In contrast, only two days of the week show negatively average returns, Tuesday (-0.24%) and Thursday (-0.97%). 

If an investor only started investing at the start of 2019 on a particular day of the week, Friday would present the best cumulative return, followed by Monday (Figure 2). Taking Fridays as an example, it’s assumed that the strategy would be to buy BTC closing price on Thursdays and sell it at the closing price on Fridays. 

The closing prices (UTC timezone, a rolling 24-hour period) are used for simplicity reasons since the desired time to buy and sell during those days is based on the investor’s preference. The same buy/sell rationale applies if another day of the week is chosen to conduct the strategy (i.e. Monday).

Cumulative Return for investing on a specific day only between January 2019 and January 2020

Figure 2: Cumulative Return for investing on a specific day only between January 2019 and January 2020

Bitcoin weekly trend in the long-term

Taking a deeper look at Bitcoin returns for a longer time period, as seen from Figure 3, we can conclude that Mondays offer the best average return from all the days of the week (0.54%). 

On the other hand, Thursday and Wednesday are the worst days of the week to invest in Bitcoin with an average return of -0.09% and -0.23%, respectively.

Bitcoin’s Monday anomaly case is reinforced from a statistical perspective since Monday is the only day of the week with a statistically significant result from the used regression models. 

Curiously, as a truly anti-status quo coin, Bitcoin shows a mean positive return on Mondays, in contrast to traditional stock markets’ Weekend Effect. 

Average Daily Return for each Day of the Week between April 2013 and January 2020

Figure 3: Average Daily Return for each Day of the Week between April 2013 and January 2020.

Using the same long-term sample starting in April 2013, an investor choosing exclusively one day of the week as a strategy would get the best option by choosing Mondays, followed by Saturdays, as seen from Figure 4.

Cumulative Return for specific day investment during the entire sample analyzed (Between April 2013 and January 2020)

Figure 4: Cumulative Return for specific day investment during the entire sample analyzed (Between April 2013 and January 2020)

Day of the week during market bubbles

We cannot ignore Bitcoin’s explosive gains from two highly volatile periods seen in 2017 and how those influence the average returns for the longer time sample. By isolating that year, we find that Monday still shows the highest average return (1.5%) across the days of the week, followed by Thursday (0.55%).

Average Daily Return for each Day of the Week between during 2017

Figure 5: Average Daily Return for each Day of the Week between during 2017

In summary, Bitcoin’s unique features reveal an opposite behavior to traditional stock markets, showing a positive average return on Mondays when considering wider time periods. However, when dealing with shorter time frames, we identify Fridays as the day with the highest average returns across the days of the week. 

As reported by Cointelegraph, a study in September 2019 showed that Bitcoin holders make a profit after an average of 1,335 days, or roughly three years and eight months. Overall, holding BTC has been profitable for over 94% of days Bitcoin has existed, according to the latest data from Bitcoin Hodl Calculator.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

This Month Will Critically Decide Whether Bitcoin Enters a Full Blown Parabolic Rally or Not

Bitcoin is technically still in a bearish trend. It is down by more than 30 percent since the 2019 yearly high when it surpassed $13,000. This month will decide whether BTC enters a new extended bull market or falls back into a bear market.
It all depends on the monthly close of bitcoin on January 31, 2019
For the first time since July 2019, the bitcoin price is set to end a full month with a higher low.
For six consecutive months, the bitcoin price recorded a lower low, which indicates a steep downtrend over an extended period of time.
There are fears that the recent upsurge is merely a relief rally following half a year of downtrend. If that is the case, the bitcoin bear market can continue on throughout 2020.
The key level that will decide whether bitcoin at last breaks out of a bearish trend and and starts an extended rally is $9,153.
A monthly close over that level, which is the monthly open for November 2019, would indicate that BTC is entering a new phase of growth.
A top cryptocurrency trader known as DonAlt explained:
If this is a bear market rally, it ends this month. If it’s a bull market rally you better be positioned. The monthly close is gonna be fun to observe, it’s either gonna be shattered bear or bull dreams.
The bitcoin price is up 23 percent this month, within less than 18 days. A clean break over $9,153 would mean that the bitcoin price will end the month with a 27 percent gain.
Even if BTC moves to test higher levels like $9,900 in the short-term, maintaining that momentum to lead a monthly close over a major resistance level is difficult.
The monthly price chart of bitcoin (Source: TradingView)
What happens if it breaks that key level?
If bitcoin begins a new extended rally, there is a strong possibility that it attempts to reach its record high.
In the long-term, cryptocurrency technical analyst Josh Rager said that the next record high is likely to be at $75,000 to $85,000.
He said:
“The next Bitcoin peak high will not be as high as most people think Lots of analysis out there point from $100k to $300k to $1M Simple rate of return will show you bottom to peak return reduces by around 20% each cycle IMO, next high hits $75k to $85k.”
That range is substantially lower than numbers often touted by investors. But, $75,000 would indicate a $1.57 trillion market cap for bitcoin.
At that level, it would allow BTC to potentially act as a true safe haven asset and store of value, becoming an actual alternative to assets like gold. The post appeared first on NewsBTC.

Ethereum 1.x Devs Focusing on ‘Stateless Clients’ to Curb Chain Bloat

As Ethereum Serenity is still years away, additional work on the existing chain is needed to maintain it fully functional throughout the transition period.

While Ethereum continues to develop the next stage of its evolution with the sharding-enabled Ethereum 2.0, a group of developers will focus on the existing chain to maintain its operability during the transition. 

Dubbed Ethereum 1.x, the project’s goal is to maintain Ethereum’s (ETH) usability while the Serenity upgrade is being worked on. As explained in a Dec. 10 blog post by Ethereum Foundation (EF), the new version is still years away:

“Our story begins with a realization by core developers that the final phase of the Ethereum roadmap, ‘Serenity’, would not be ready as early as originally hoped. With potentially many years before a full ‘Ethereum 2.0’ roll-out, the current chain would need changes to ensure that larger problems that wouldn’t render Ethereum in-operable before a comprehensive protocol upgrade could be delivered.”

While there are no single insurmountable issues, the developers point to small degradations of performance due to the continuous growth of the blockchain. Full nodes currently need to download and process the entirety of Ethereum’s history, currently weighing over 200 gigabytes. 

This figure grows by 10-15 GB every month and leads to issues with node operation and network latency. The slightly separate issue of “state bloat” would also make block verification harder.

State is one of Ethereum’s key technology concepts. It represents the collective memory of all smart contracts and all current wallet balances. Each transaction makes modifications to the overarching state, which over time leads to bloat.

How Ethereum 1.x solves the problems

Several solutions are proposed to mitigate part of these issues. Pruning, the deletion of certain unneeded blockchain data, could mitigate storage requirements — but it’s complex to implement.

Network latency can be fixed with block “pre-announcement,” where miners would announce new blocks before they are validated. This would give more time for nodes to distribute block information, ensuring the correct operation of the blockchain. This optimization is “within reach,” according to the developers.

Finally, reducing state bloat is the core direction of research. An earlier proposal on introducing “state rent,” where smart contracts would have to pay fees for their share of state usage, was thrown out as unfeasible. 

Instead, Ethereum 1.x is introducing the concept of “stateless clients.” Instead of storing the entire state, clients will simply compute the changes to it from a previous block — using “block witnesses” to ensure their validity. Though some nodes will still need to maintain the entire state, the benefits appear to be significant.

The relationship with Serenity

Ethereum 1.x is developed under the full patronage of EF. But while they are both under the same umbrella, the 1.x code base will remain separate from 2.0.

Cointelegraph approached James Hancock, the team coordinator for the 1.x project, for clarifications. When asked about how the various phases of Ethereum 2.0 will interact with it, he explained:

“Phase 0 implemented will still have Eth1.X as a separate code base. Phase 0 is a bridge, and although the transition is gradual between Eth1 and Eth2, pay attention to the state, as in the contract and storage state of Ethereum. Where that goes, Ethereum goes.”

Although the transition will be gradual, there is a possibility that a contentious hard fork like the one that resulted in the creation of Ethereum Classic could occur. But while that remains a possibility, the 1.x team has no intention of creating a separate chain. Hancock added:

“The Freedom to Fork is maintained throughout the entire process. The same as it is today, and as it should be in my opinion. Theoretically possible, yes. Is it planned by the Eth1.X team? No.”

There may be a point of no return in terms of the ability to fork a pure 1.x chain. As Hancock elaborated, as soon as the state moves to the 2.0 chain, it will become the primary version of Ethereum. However, there are no specific milestones for it as of yet.