Ethereum Bullish Run Might Be Short Term
Ethereum regained momentum, raising its weekly increases to over a third of its value. Still, analysts remain skeptical.
Quick overview
- Ethereum has regained momentum, increasing over a third of its value, but analysts remain skeptical due to fundamental concerns.
- The total supply of Ethereum has reached an all-time high of 120.07 million, undermining its previous deflationary narrative.
- The upcoming Dencun upgrade is expected to lower the ETH burn rate and transaction fees, contributing to renewed inflationary pressure.
- On-chain activity has declined as Layer 2 networks divert usage from the Ethereum mainnet, leading to reduced transactions and staked ETH.
Live ETH/USD Chart
Ethereum regained momentum, raising its weekly increases to over a third of its value. Still, analysts remain skeptical.
Historically, Ethereum’s notable price reductions relative to Bitcoin have signified great purchasing opportunities, as indicated by CryptoQuant. The current scenario is starkly different because of many fundamental concerns.
The extent of Ethereum’s total supply stands at an all-time high of 120.07 million, posing a significant problem: the decline of the former deflationary supply narrative.
This has been primarily attributed to the Dencun upgrade scheduled for March 2024. It lowered the ETH burn rate and transaction fees, further exacerbating this trend, resulting in renewed inflationary pressure on the ETH market.
Moreover, on-chain activity has been dormant for quite some time. This drop is primarily a result of Layer 2 (L2) networks diverting the Ethereum mainnet’s usage, leading to a decline in transactions and unique active addresses since 2021.
The rise of L2s has weakened the utility narrative of ETH by diluting demand for base-layer blockchain space, all while scalability has improved. Furthermore, institutional interest in ETH has been waning, according to CryptoQuant.
Recent reports indicate that the amount of ETH staked has decreased from a peak of 35 million in November 2024 to approximately 34.04 million now. Since February of this year, ETF holdings have also reduced by about 400,000 ETH, suggesting a decline in investor confidence.
The report contrasted the fortunes of the two cryptocurrencies, stating, “Bitcoin is benefiting from strong institutional demand, a capped supply, and ETF-driven inflows.”
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Related Articles
Comments
Sidebar rates
Related Posts
Save
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals