Bitcoin and ether erased Wednesday’s gains as Ethereum’s highly anticipated London hard fork, or backward-incompatible upgrade, neared. 

Having faced rejection at $40,000 early Thursday, bitcoin, the top cryptocurrency by market value, is currently trading near $38,000. The 4% drop has nearly reversed Wednesday’s rally from $37,500. 

Ether is also down 4% near $2,600 at press time after it jumped 8% to $2,770 on Wednesday and hit its highest level since June 7, according to CoinDesk 20 data. 

The London hard fork, which includes four Ethereum Improvement Proposals (EIP), is scheduled for implementation around 12:30 UTC, according to etherscan.io. One of the proposals, EIP 1559, will introduce a mechanism to burn a portion of fees paid to miners, thereby curbing ether’s supply growth over time and bringing store-of-value appeal to the native token of Ethereum’s blockchain. 

Some analysts have cautioned that the upgrade’s positive effect will be seen over time and that there may be little or no immediate price action. 

Ether has gained nearly 60% in the two weeks leading up to the upgrade. As such, it looks prone to a “sell-the-fact” trade. “Buy the rumor, sell the fact” refers to a situation where some traders buy an asset in the run-up to a supposedly bullish event and sell after it occurs.

Technical charts, however, are painting a bullish picture. “A new oversold upturn in the weekly stochastics [indicator] suggests ether can clear a 38.2% Fibonacci resistance level near $2724 for a target of a 61.8% Fibonacci retracement level near $3356,” Katie Stockton, founder and managing partner of Fairlead Strategies, said in the weekly research note published on Monday. 

As for bitcoin, Stockton expects consolidation for a while longer before extending the recent recovery rally from $30,000. Bitcoin jumped over 12% last week, its best weekly performance in three months. The momentum, however, has faltered this week, with prices falling to $37,500 on Wednesday. 

“We expect the pullback to mature in 1-2 weeks near the 50-day MA (~$34,800), after which bitcoin is likely to clear $42,600 for a revised upside target of a secondary Fibonacci retracement level near $51,000,” Stockton noted, referring to the 50-day moving average. 

The options market seems to agree with Stockton’s bullish view. While last week’s aggressive call buying has cooled, the demand for puts, or bearish bets, remains low. The put-call open interest ratio continues to slide, hinting at fading fears of a deeper price drop, as Delphi Digital noted in its daily analysis. 

News flow continues to be positive, highlighting traditional investors’ growing appetite for cryptocurrency. JPMorgan has started pitching a passive bitcoin fund to clients of its private bank, CoinDesk reported early today. 

Bitcoin’s immediate prospects will turn bleak if the 50-day moving average support at $34,800 is breached, according to technical patterns.

Also read: Why Web 3.0 Tokens Might Be the Next Hot Trade in Cryptocurrencies