Ethereum rose to its highest level in nearly two months, thanks to an upcoming software update that will slow the rate at which new tokens are minted. Data for Wednesday showed the cryptocurrency gaining as much as 10%, trading at $ 2,726, which is the highest price it reached since early June.

Meanwhile, Bitcoin shot to $ 39,845, which is 4.7% higher than its rate the previous day.

The optimism over the update is reminiscent of the hype surrounding past cuts in block rewards for bitcoin miners. While 'halvings' were planned events, Bitcoin generally rallied in the expectation that demand would either remain stable or rise while the rate of release would slow down.

Ethereum is still far from all-time highs even though it rose by approximately 1,000 pips for the past two months. The past movements form a bullish "W" pattern, and analysts say the token is already on the verge of completing it.

The update, dubbed as EIP-1559, will split about 13,000 new ETH issued daily to pay fees to miners. The base fee that users pay to process transactions will also be removed, which some analysts classified as one of the most important updates in Ethereum history.

Supply may also decline further when Ethereum switches to a different transaction verification mechanism next year. This new system would use computers that support the Ethereum network to stake ETH coins instead of miners.

Miller Tabak chief strategist Matt Maley said the recent comments from SEC chairman Gary Gensler helped allay concerns on potential regulation.