By
Chimamanda U. Martha
May 20th, 2024
Ethereum (ETH) price has established a solid support level around $2,972, which could yield a bullish rebound towards its all-time high soon.
Amid the ongoing cryptocurrency correction, Ethereum (ETH), the second-largest digital asset with a fully diluted valuation of about $360 billion, has severally teased below $3,000 in the past five weeks. On the daily time frame, ETH price against the US dollar has been forming a descending triangle with a solid base of around $2,972.
As the trading instrument approaches the edge of the consolidation, a breakout on either side will lead to huge price movements. According to a veteran analyst Peter Brandt, Ethereum price has not signaled any definitive movement from the price action study.
ETH $ETH is becoming a very intriguing chart to me
The pattern is too long to be considered a flag, but a channel is the most likely labeling
I could go either way with this chart pic.twitter.com/EeSa7SyAmA— Peter Brandt (@PeterLBrandt) May 9, 2024
Ethereum No Longer Ultra Sound Money
As Coinspeaker recently reported, Ethereum has gradually been losing the ultra-sound money status following the recent Dencun upgrade. Notably, the Ethereum network has been collecting less and less transaction fees from layer two projects since the Dencun upgrade in March 2024.
“The Dencun upgrade has made ETH inflationary again, potentially killing the narrative of “Ultrasound” money as a structurally lower amount of transaction fees burned have had the effect of not decreasing the total supply of ETH enough to keep it deflationary,” Julio Moreno, head of research at CryptoQuant noted.
According to on-chain data provided by Etherscan, the amount of Ether burned on Wednesday, May 8, 2024, amounted to about 547 units. In comparison, the Ethereum network burned as much as 7k units daily before the Dencun update.
Nonetheless, the Dencun upgrade was necessary to make the Ethereum network more competitive compared to other layer one (L1) chains such as Solana (SOL), Toncoin (TON), and BSC. Furthermore, most of the web3 projects, including gamifi platforms, require fast and ultra-cheap transactions to seamlessly onboard more users.
Political Entanglements
Ahead of the upcoming final decision on VanEck spot ETH ETF on May 23, the Ethereum network has found itself in the middle of huge political debates in the United States. As Coinspeaker explained, the United States Security and Exchange Commission (SEC) has held its argument that Ethereum falls under a security and not a commodity like Bitcoin.
Consequently, Wall Street analysts believe the US SEC will reject a dozen applications of spot Ether ETFs later this month. Meanwhile, former US President Donald Trump has reassured the crypto community that he supports all altcoins and that government resistance will end if elected for POTUS later this year.
The decision on spot Ether ETF is likely to follow the same path as Bitcoin’s, especially after Consensys filed a lawsuit against the US SEC.
Ethereum price is gradually following Bitcoin price action, thus it is safe to assume the top altcoin will reach a new all-time high soon. However, the Ether price on the daily chart must regain the 50 Moving Average (MA) as a support level to ensure bullish momentum.