Bitcoin (BTC) has rolled out another upgrade called Taproot — the first since 2017.

At a technical level, engineers should be in a celebratory mood because the latest upgrades always make crypto more efficient and with smoother transactions.

At the investor level, this usually serves as a liquidity event in so far as investors buy the digital gold until the upgrade and sell once the upgrade has been announced because we essentially remove the psychology of the anticipation of the new upgrade.

Removing that anticipation makes Bitcoin unattractive in the short-term, but it does no value damage to the long-term narrative.

Taproot’s new tech is coined as Schnorr signatures.

These signatures will mean transacting in Bitcoin has become more secure, efficient, and less expensive.

Most importantly, the upgrade will better enable bitcoin to execute smart contracts on the blockchain.

A critical change from Taproot is the potential for smart contracts.

Smart contracts are digital agreements written in code and stored on the blockchain.

They’re essential in powering decentralized finance, or DeFi, applications and nonfungible tokens, or NFTs.

Compared to Ethereum, Bitcoin has historically been much more limited in accommodating smart contracts.

This will likely lead to more day-to-day applications for bitcoin.

Taprooted Bitcoin will wield better security by enabling multi-signature transactions, or those that involve multiple addresses, to appear as a standard, single transaction.

Multi-signature transactions are often used to enable smart contracts.

As a result, multi-signature transactions will be indistinguishable from simple transactions translating into, meaning greater anonymity.

Schnorr signatures will limit the amount of data required for multi-signature transactions, which are more complicated to process than standard ones.

With less data involved, transactions will become more energy and time-efficient.

Consequently, transactions will be cheaper to process, leading to lower cost of transaction fees.

Taproot will effectively make the digital currency into a better all-around currency and encourage higher adoption rates.

The last major upgrade in 2017, the Lightning Network, helped facilitate much faster and cheaper bitcoin payments than before.

Clearly, the increased Bitcoin volume will take time to materialize, but the positive results from the Lightning Network is one of the main catalysts to higher Bitcoin prices that elevated to north of $60,000.

If developers can keep churning out a major upgrade every 4-5 years, it’s just a matter of time before the currency becomes frictionless, feeless, ubiquitous, and positive for the environment.

At a broader level, Bitcoin is still in the teething stages of its evolution, but it’s safe to say, it’s come a long way since its inception.

Making it more palatable for developers to create apps on will also suck away value and volume from Ether.

On the negative side of the ledger, there are a few potential drawbacks to the upgrade, but they’re minimal in the face of the benefits and only reveal themselves sometimes because Taproot is only partially adopted by network participants (only 54% of Bitcoin nodes enforce Taproot right now, a number which has ticked up in recent days).

The second negative is that it’s not entirely certain how the smart contracts and the functioning for decentralized apps (dApps) will work itself out.

Ethereum is well established on this front, and a few developers have told me that this new upgrade for the dApps and smart contract angle of it, is somewhat misleading.

It will take time to work out the kinks and not all upgrades go without issues.

As we barrel towards the launch of the Metaverse, it’s still a few years out, cryptocurrencies are basically fighting against each other to be the first of the bunch to be adopted as the payment of choice for the Metaverse.

That’s why these upgrades are highly necessary for a de facto digital arms race.

Being able to build apps on top of the crypto leads to what the Metaverse will be about.

Imagine your avatar entering the Metaverse and buying a Metaverse real estate property in Ether or Bitcoin and that transaction goes through instantaneously in real-time and 100% secure.

That is the world we are trending towards, even if we are a long way off now, and many of these developers for Ethereum and Bitcoin are skating towards where they think the puck will be in 5 or 10 years.

I believe we will hold the $58,000 support level after this dip, and we will take a run past the new all-time highs.

It’s only a matter of time before we close in on $100,000 even if traders took profits from the Taproot upgrade.

Lately, the chatter of the “metaverse” has run riot even some coining it as the “Internet 3.0.”

Partaking in this upgrade of the internet are ostensibly the prodigious firms of the West Coast which many of you already know.

Many of those stalwarts have nothing to do with crypto, but I must bring them up because there is an uncanny correlation between the future project of the metaverse that intersects with the fortunes of crypto.

The metaverse will deliver an augmented reality experience that is habitually billed as an experience exceeding physical reality.

In this realm, digital borders most likely won’t exist.

It will be absent of free-flowing US dollars and be replaced by a currency that doesn’t pertain to a sovereign nation.

A digital currency must embed in a way that facilitates the smooth functioning of the metaverse and it is highly likely that currency will be a cryptocurrency or various types of cryptocurrencies.

The rules of the realm aren’t written up yet, but I firmly visualize a deep intersection between cryptocurrencies and the business of the metaverse.

For example, instead of visiting the official NFL website and clicking on their official shop, I’ll be able to walk over to a 3D NFL shop in the metaverse and view the apparel myself then pay directly in crypto.

The goods will then be shipped to my physical address in the real world. No more flipping up a mobile or computer screen and entering www dot blah blah blah.

Another transformative issue, if you believed that personal data and the protection of it was a do or die issue now, then wait until the metaverse exists and we are represented in avatar form inside of it.

Virtual reality has gotten miles better in the last 10 years and it's all part and parcel of priming this technology to insert it into the metaverse.

For information to be secure and decentralized, we will need to harness the power of blockchain technology which cryptocurrencies run on.

Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain.

There is no protection of personal or financial data on a virtual reality platform if there is no blockchain technology.

Engaging with other people in a virtual environment is going to open a can of worms and expose people to hackers and it’s the developer’s responsibility to create a secure environment.

People will not partake if it’s the status quo of modern-day data breaches and minimal punitive fines followed up by little legislation to prevent this from occurring again.

Blockchain enables not only instantaneously confirmed information but also enables these transactions to be cryptographically secured and protected.

Compared to the future of money, our antiquated system of wire transfers, paper checks, and “know your customer” forms seem idiotic when we have the technology for so much more.

Crypto transactions are the panacea to all these questions.

Even with price volatility that has been engulfed by bitcoin and other decentralized cryptocurrencies, the rise of stable coins and central bank digital currencies (CBDCs) means that the ability to conduct transactions via crypto has never been simpler.

I can easily envision some sort of metaverse stable coin partially pegged to a basket of fiat currencies.

Clearly, technology and cryptocurrency are at a fork in the road where major Silicon Valleys are going to move mountains to make this work as they see fit.

Moving mountains means pouring gobs of capital into improving the technology of cryptocurrency and the ecosystem that integrates with it.

The investments coincide with major capital earmarked for metaverse structural development with several companies spending $5 billion per year.

As we receive each incremental upgrade from Ethereum, Bitcoin, and the other alternative coins, it’s literally a fight to the top to see who will be the fittest to first deploy itself into the metaverse and carve out a massive role in the future of the digital money.

If you believe that these headliner cryptocurrencies are part of the metaverse formula, they are highly likely to appreciate 10X by the time the metaverse is ready to rock and roll.

We are at the point where sure Bitcoin will go higher and I fully expect it to be close to $100,000 next year, but Ether will outgain Bitcoin by percentage points.

And it’s no shocker that Ethereum (ETH) has already climbed above $4,000 for the 3^rd time this year.

Talk about a 2-foot putt.

In the last five months, the supply of ETH has shrunk meaningfully from 22 million tokens to 18 million today.

Dwindling supply intersected with higher demand means higher prices no matter what asset you’re talking about.

The tape shows that retail and institutional money piling into ETH in the last few months means fewer sellers looking for short-term smash and grab type of profits.

I do believe this is a legitimate reason why we are seeing the volatility of crypto settling down the last month as nobody is willing to take profits when they know more profits are on the table for next year.

In total, the Ethereum network has seen its first consecutive week of negative supply issuance as frothy markets drive persistently high transaction fees.

The London upgrade introduced a burn mechanism into Ethereum’s fee market in early August, meaning a small quantity of Ether (ETH) has since been destroyed with every transaction executed on the network.

The Ethereum London Hard Fork upgrade is a set of five improvement proposals.

Unlike Bitcoin, there is no limit to mining Ether coins, which makes it an inflationary cryptocurrency which is why development understood installing a deflationary mechanism would do wonders for the price of ETH.  

Miners are paid new coins for validating each block of information. They are compensated with transaction fees that are paid by users.

One of the biggest benefits of the London upgrade is that it has enabled the Ethereum network to handle a higher transaction load per second. It will help with scalability and tackle the high transaction fees — one of the biggest complaints of small investors or those who make frequent transactions.

Since the London upgrade, more than 724,400 ETH worth $3.1 billion has been permanently destroyed.

Truth be told, ETH has not experienced lower transaction fees, or gas price.

Yet, the upgrade has not increased gas prices but has made them more predictable and stable.

This has led to a smoother network overall during peak hours.

Transaction volumes are 400% higher since the same period last year and Ethereum needs to handle the higher workload to legitimize itself into a solid cryptocurrency.

The inability to function properly as a network could cause a massive sell-off that would spill into more mature Bitcoin.

ETH simply won’t be attractive relative to other crypto if they can’t put a lid on transaction costs.

The reason equities are so attractive is not only because they are fully insured by the federal government, but because liquidity and costs are minimal.

Thwarting this underlying issue of a bloated supply, six times larger than Bitcoin's, should act as a major catalyst in awakening the price action of ETH and that’s what we are currently seeing.

In total, there's been a 57% reduction in cumulative ETH issuance to date and it’s hard for me to envision a scenario in which ETH is not over $8,000 per unit next year.

Generally speaking, after the transition to proof of stake, the supply of ETH will decline 2% annually.

The scarcity value that will hit next year will easily cause the asset to double quickly.

I predict a rapid run-up in ETH prices leading up to the December debt ceiling triggering new all-time highs in BTC and ETH.

Jump on the bandwagon while it’s still rolling!