Ethereum Faces Technical Headwinds as EIP-7999 Promises Fee Structure Revolution
Ethereum (ETH) is currently trading at $3,500. It has dropped 2.4% in the last 24 hours as it deals with key barrier levels and changing
Quick overview
- Ethereum is currently trading at $3,500, having dropped 2.4% in the last 24 hours amid changing market conditions.
- The recent EIP-7999 proposal aims to simplify transaction fees by creating a unified fee market, enhancing user experience.
- The Dencun upgrade has significantly reduced average gas fees by 95%, improving Ethereum's scalability and cost structure.
- Current technical indicators suggest mixed signals for Ethereum's price, with potential consolidation or decline in the short term.
Ethereum ETH/USD is currently trading at $3,500. It has dropped 2.4% in the last 24 hours as it deals with key barrier levels and changing market conditions. The second-largest cryptocurrency in the world by market capitalization is at a crucial point. Recent protocol changes hold promise for the long run, but short-term technicals imply that the currency may be about to consolidate.
EIP-7999 Introduces Unified Fee Market to Simplify Transaction Costs
Vitalik Buterin, one of the founders of Ethereum, and Anders Elowsson, a developer, have announced EIP-7999, a breakthrough plan to change the way transaction fees function on the network. The Ethereum Improvement Proposal, which came out this Tuesday, aims to create a single multidimensional fee market where users can set a single maximum cost for different resources.
The plan says it will make it easier to estimate and manage different fee components while making transactions. Instead of negotiating the existing system’s many price structures, customers would simply designate one comprehensive maximum fee, considerably enhancing both capital efficiency and user experience.
This change comes at a good time, right after the Dencun upgrade was successfully put into place in March 2024. This upgrade has already made Ethereum’s scalability and cost structure much better.
Dencun’s Remarkable Impact: 95% Fee Reduction Transforms User Experience
The Dencun upgrade has changed the way Ethereum works in a big way. According to Etherscan data, average gas fees for popular transactions have dropped by an amazing 95% in just one year, from about $86 to roughly $0.39. This huge drop has solved one of Ethereum’s biggest problems since it started to grow quickly in 2017.
Even with these changes, the pressure from competitors is growing. In 2024, Ethereum still had the most transaction fee revenue of any blockchain, making $2.48 billion. However, other networks had made a lot of progress. Tron’s fees more than doubled to $2.15 billion, mostly because of stablecoin transactions. Solana’s fees, on the other hand, were up by an amazing 2,838% to $750 million because of more activity on the network.
ETH/USD Technical Analysis Reveals Mixed Signals for Price Action
Current technical indicators make it hard to see where Ethereum is going in the near future. ETH is hovering between $3,500 and $3,700. It has tried several times to break through the $4,000 mark, which is essential for the mind, but it has not been able to break through the $3,750 resistance level.
Key Technical Levels:
- $3,620, $3,700, and $3,750 are the first levels of resistance.
- The main support level is $3,510, while the secondary support levels are $3,420 and $3,350.
- The important breakout level is $3,820, which might go to $4,000.
The hourly MACD signal is getting stronger in negative area, and the RSI has slipped below the neutral 50 zone, which could mean short-term weakness. Also, ETH is trading below the 100-hour Simple Moving Average right now, which means that the market is going down in the short term.
Derivatives Market Data Signals Caution Ahead
Darkfost, an analyst at CryptoQuant, has found worrying patterns in the futures market that point to more selling pressure. The taker buy/sell ratio for Ethereum on Binance has dropped to 0.87, which is one of the lowest values seen this year. If the ratio is less than 1.0, it usually means that sell orders are outnumbering buy orders. This means that traders are either closing long positions or starting short positions.
This bearish mood in the futures market started around July 18 and has stayed strong, making it harder for prices to go up. The seven-day and 30-day simple moving averages have also begun to trend downward, which adds to worries about the market losing momentum.
Ethereum Price Predictions: Bullish Long-term Despite Near-term Challenges
Some analysts still think Ethereum will do well in the long term, even when short-term technicals point to consolidation or possible decline. Based on what looks like a big monthly triangular pattern, market expert Titan of Crypto thinks the price might reach $8,000, which could lead to a big breakout.
Some other positive predictions include that ETH might reach or even exceed its prior all-time highs once critical resistance levels are broken and demand in the wider market picks up again. Some analysts think that prices below $4,000 are good entry places since institutions are buying up coins, there aren’t enough coins available, and network activity is still high.
Price Scenarios:
- Bearish Case: If the price drops below $3,510, it could go to the $3,420-$3,350 support zone.
- Neutral Case: The price stays between $3,500 and $3,700.
- Bullish Case: If the price breaks above $3,820, it might go to $4,000 and maybe even $4,120.
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