- ETH/USD may be vulnerable to short-term fluctuations ahead of the hard fork.
- Muir Glacial will be activated at 7:50 UTC.
Ethereum's community is bracing itself for the first hard fork of 2020. The upgrade called Muir Glacial will take place in a couple of hours (2.50 EST or 7.50 UTC) on block #9,200,000.
What is Muir Glacial
Apart from being a glacial in Alaska, it happens to be an emergency hard form on Ethereum blockchain that is aimed to delay the activation of difficulty bomb for another 4 million blocks. The Bomb is a mechanism realized in the ETH code base. It is supposed to trigger an exponential growth of mining difficulty on consensus algorithm proof-of-work (PoW) and thus motivate the network participants to transit to proof-of-stake (PoS).
Why defusing the Bomb
The decision to launch an emergency hard form was made at the beginning of December. Notably, some developers proposed to scrap the bomb mechanism altogether, but the idea was not supported as it might trigger an adverse reaction within the community. Notably, this is not the first time the developers interfere with the mechanism of mining difficulty. In 2017 the team had to implement Byzantium hard to reduce the time of block generation as mining difficulty was growing too fast.
The delay is needed to allow the developers enough time to create a scaling solution and prepare the transition to Ethereum 2.0.
What to expect
Considering that Muir Glacial is a no- contentious hard fork, it is unlikely to split the chain and create two coins. Miners are likely to upgrade as it is in there interesting to delay the Bomb that would slash their revenues. Earlier, we have reported that the community was concerned with the timing of the update. However, according to Etherenodes.org, over 80% of synced clients are ready for the update.
The vast majority of infrastructure providers confirmed their support, while several large exchanges, including Coinbase, Poloniex, Kraken, and Huobi, have yet to clarify their status.
Ethereum's price may be volatile following the event; however, sharp movements are unlikely unless something goes very wrong. At the time of writing, ETH/USD is changing hands at $129.19, having recovered from the intraday low of $128.40. The second-largest coin has retreated from $132.78 (January 1 high), in line with the broader cryptocurrency market momentum.
From the technical point of view, we will need to see a sustainable move above $130.00 for the upside to gain traction and allow the price to retest Wednesday's high. The next resistance is created by a combination of SMA200 (Simple Moving Average) 4-hour and December 29 high on approach to $138.00.
On the downside, the local support is created by $128.50. SMA100 and SMA50 4-hour reinforce this area. The next support comes at $127.50 (the lower line of 4-hour Bollinger Band). Once it is out of the way, the sell-off is likely to be extended towards $125.00.
ETH/USD, 4-hour chart
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Muir Glacial will be activated at 7:50 UTC.
Ethereum’s community is bracing itself for the […]