Key Points
- Following the Dencun upgrade, Ethereum’s fees hit a record low, causing a surge in L2 transactions.
- Despite turning inflationary, Ethereum’s price action has turned bullish, with its exchange reserve dropping.
The Dencun upgrade has significantly impacted the Ethereum network, leading to a substantial growth in Layer 2 (L2) transactions. This upgrade has also resulted in Ethereum’s fees plummeting to an all-time low.
Ethereum’s Changing Landscape
This change in the Ethereum ecosystem has also influenced the coin’s deflationary characteristic. The reduction in fees burned has caused Ethereum to become inflationary, marking a shift from its recent deflationary trend.
Typically, deflationary characteristics are viewed positively as they can potentially drive up the asset’s price by reducing supply. However, this doesn’t seem to be the case with Ethereum at the moment.
Ethereum’s Market Performance
Despite this shift in characteristics, Ethereum‘s market performance has been bullish. According to CoinMarketCap, Ethereum’s value has increased by over 2% in the last 24 hours, following a week of price drops.
At the time of writing, Ethereum was trading at $2,476.41, with a market capitalization exceeding $298 billion. This price uptick has put more than 9 million Ethereum addresses in profit, accounting for over half of all Ethereum addresses.
Analysis of on-chain data reveals that Ethereum’s exchange reserve is decreasing, indicating increased buying pressure and potentially signaling a bullish trend. Other bullish metrics include a 158.76% increase in the total number of coins transferred in the last 24 hours and a 19.01% increase in the total number of active wallets used for transactions.
Despite these positive metrics, Ethereum’s daily chart analysis reveals a testing of its 20-day simple moving average (SMA) resistance. A successful breakout could potentially see Ethereum reaching $3.5k in the near future. However, the MACD indicates a bearish advantage in the market, suggesting a possible drop to $2.2k.
