Ethereum’s Fee Drop: Impact on ETH

• The Dencun upgrade significantly boosted Layer 2 solutions.
• ETH’s recent price behavior has turned notably bullish within the past 24 hours.

Following the Dencun upgrade, Ethereum [ETH] experienced transformative changes within its ecosystem, notably causing Ethereum’s fees to drop significantly. Consequently, ETH’s fees have reached an all-time low, which had substantial effects on its deflationary traits.

So, how will these developments influence ETH’s value moving forward?

Is There a Shift in Ethereum’s Dynamics?

A recent tweet from IntoTheBlock highlighted several noteworthy updates. Since Dencun, Ethereum’s Mainnet fees plummeted to an unprecedented low due to a surge in Layer 2 transactions. The EIP-4844 initiative lowered Layer 2 costs by tenfold, propelling record-breaking activity.

This growth was advantageous for Layer 2 solutions, as their transaction volumes and utilization soared. However, the accompanying reduction in burned fees caused ETH to become inflationary, diverging from its recent deflationary trend.

Deflationary qualities are often seen as a positive indicator, as they typically imply a potential price increase when supply decreases.

To gain a deeper understanding of Ethereum’s current stance, we decided to investigate further.

Prospects for Ethereum

According to CoinMarketCap, ETH has experienced a robust turnaround, as it witnessed a 2% price surge in the past 24 hours after a week-long decline.

Currently, ETH trades at $2,476.41, with a market capitalization exceeding $298 billion. Over 9 million Ethereum addresses are now profitable, representing more than half of the total ETH addresses.

Source: IntoTheBlock

Analyzing on-chain data offers insights into whether these adjustments will impact Ethereum’s market standing in upcoming days.

As analyzed through CryptoQuant’s data, the dropping exchange reserves for ETH suggest rising buying pressure, a bullish signal in the market. Alongside this, ETH’s total transferred coins increased by 158.76% in the past 24 hours.

The uptick in active wallets used for sending and receiving coins spiked by 19.01% compared to the previous day.

Source: CryptoQuant

Indicators illustrate a predominantly positive outlook, prompting us to investigate Ethereum’s daily price charts for further insights.

Read Ethereum’s [ETH] Price Prediction 2024–2025

Ethereum is currently testing its 20-day simple moving average (SMA) resistance, and a successful breakout could lead ETH to reach $3.5k shortly.

Nonetheless, the MACD unveils a bearish tendency in the market, hinting at a potential descent to $2.2k.

Source: TradingView

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