As a project in continuous development, Ethereum occasionally undergoes significant upgrades, called forks, that allow for the implementation of new technologies or change the rules of the blockchain.





The next of these planned updates is called “Constantinople,” and it will bring changes to Ethereum’s rules about block rewards and new ETH generation implemented into the chain. It’s scheduled to go live at the block height 7,080,000, which probably falls in mid-January 2019.





While some have suggested the fork is a bullish sign, forks are risky events. How should you approach investment in the period leading up to and following a hard fork? We decided to take a look at how the market responded to five previous ETH hard forks to find out.





Of course, not all forks are created equal. Two of the forks we looked at, Homestead and Byzantium, were planned, and are mentioned in the Ethereum white paper. The other three were responses to unexpected problems that emerged with the network.





ETH Forks Name Time Why Note Homestead 2016/03/14 Ethereum network upgrade Scheduled The DAO 2016/07/20 DAO contract hacked Unexpected EIP150 gas cost 2016/10/18 Frequent DoS to the network Unexpected Spurious Dragon 2016/11/22 Congestion of the network Unexpected Byzantium 2017/10/16 Ethereum network upgrade Scheduled Data source: Gate.io Research Institute





For each of these five forks, we collected data for 30 days, the ten days leading up to the fork, and then the 20 days following it. We visualized price information before and after the fork.













In addition to daily price data, we also calculated the daily price variance.













What can we learn?





The peak of the price fluctuations for the three unplanned hard forks (DAO, EIP150 and Spurious Dragon) occurred on the day of fork according to the graph we drew. Fluctuation after the fork was slightly greater than before the fork.





For the two planned forks (Homestead and Byzantium), the peak appeared in the pre-fork period, and price fluctuations significantly decreased after the fork.





The forthcoming Constantinople hard fork is also a planned system upgrade, so we might expect price fluctuation similar to what we saw during the Homestead and Byzantium forks.





There are other lessons here too, though. Whether the fork was planned or not, we found that fluctuations were always higher in the first ten days after a fork, compared to the second ten days.









However, this effect seems to be mostly due to high overall prices on the day of the fork itself, which tend to be followed by a correction in the first ten days after the fork, and then a stabilization in the second ten days.





Obviously, past performance may not be a good indicator of future results. But if you don’t consider the patterns we’re seeing in previous forks to be a coincidence, you might want to avoid buying Ether within the 10 days following the fork.







