By
Godfrey Benjamin
April 26th, 2024
An analyst from Grayscale argued that the crypto market is anticipating Ethereum’s transaction throughput and cost reduction through the Dencun upgrade more, making it more competitive with other layer-1 blockchains.
In an electrifying display of market dominance, Ethereum (ETH) price has soared to a 22-month high, marking a significant milestone for the second-largest cryptocurrency by market cap.
Ether’s Meteoric Surge
As of the latest trading session, Ethereum’s price peaked at $3,125, resulting in a massive gain of 36% over the past month. Ethereum’s performance is not just a solo journey but has also contributed to the overall crypto market’s 0.5% increase on the day, with total capitalization reaching $2.1 trillion – a figure not seen since April 2022.
Ethereum’s On-Chain Activity: Whales Investment
It happens pretty rarely that the weekly returns of Bitcoin (BTC) and Ethereum (ETH) are very distinctive from each other. Since the last week, Ethereum has registered a weekly gain of approximately 5%, while Bitcoin has faced a downfall of -2.31%. Such conditions suggest that a differential on-chain activity might have taken place in any of these assets.
The supply held by top addresses, a metric provided by the on-chain data analytics platform Santiment, tracks the number of coins held in the largest wallets for a particular cryptocurrency. As seen above, a cumulative opening balance of 69.51 million ETH was recorded on Friday, kept by the top 1000 ETH wallets. Surprisingly, this cumulative number reached 69.68 million ETH on Sunday, reflecting that the whale wallets have invested over $514 million in a span of just 48 hours. This action strongly suggests that when the most significant stakeholders for cryptocurrency purchases during a short period, it puts upward pressure on the price.
Different Take from Grayscale
While the majority of the uptrend for Ethereum has been tied to its anticipated approval of spot ETFs, Grayscale Investments presented a different perspective from its recent report. An analyst from Grayscale argued that the crypto market is anticipating Ethereum’s transaction throughput and cost reduction through the Dencun upgrade more, making it more competitive with other layer-1 blockchains.
Grayscale points out that two things could help Ethereum grow in the future. First, it could benefit from a “net deflationary supply”, meaning there might be less Ethereum available over time, which could make it more valuable. Second, Ethereum can make money through its network, which is also suitable for its growth. The report also talks about how Ethereum has a chance to become more popular for smart contracts again. Grayscale thinks that if Ethereum can handle more transactions faster and at a lower cost, it can attract projects that need strong security and protection against interference.
Ethereum (ETH) Price Analysis
Ethereum is currently trading at around $3,052, with the Exponential Moving Averages (EMA) indicating a short-term bullish trend as the price is above the EMA lines of 20, 50, 100, and 200 periods, which are at $3,075 and $3,044, respectively.
Fibonacci retracement levels, drawn from a low of $2,828 to a high of $3,116, show potential support and resistance levels. The price has recently fallen below the 0.236 level ($3,062), which could act as resistance if the price tries to recover. The Relative Strength Index (RSI) is at 44.91, which is neither in the oversold nor overbought territory, suggesting a neutral momentum.
It’s important to note that a significant drop has just occurred, breaking through the 0.5 Fibonacci level ($3,003), which might indicate a stronger bearish momentum if sustained. Technical indicators suggest caution, as further support levels may be tested if the downtrend continues.
