Ethereum
Dencun Upgrade Breaks Ethereum’s “Ultra-Sound Money” Status
Latest report from crypto analytics firm CryptoQuant casts doubt on Ethereum’s status as an ‘ultra-sound currency’ following the implementation of the Dencun upgrade in mid-March. This upgrade, designed to reduce fees and improve network scalability, accidentally made Ethereum a more inflationary asset.
However, analysts note that a slowdown in the ETH burn rate will cause the Ethereum price to drop by almost $2,500.
Dencun upgrade that backfires
The CryptoQuant report points out that the upgrade of Dencun has significantly reduced transaction fees on Ethereum, making them approximately 4x lower on average compared to pre-upgrade levels, resulting in less ETH being burned.
At the same time, this led to a rapid increase in the supply of Ethereum, contrary to expectations of deflation after the 2022 merger. Following the 2022 merger, Ether experienced deflation, with the total supply increasing from 120.491 million to 120.097 million in September 2022.
CryptoQuant’s report highlights a 400,000 token increase in ETH supply since April, indicating a deviation from the deflationary path.
Upcoming ETH Price Correction: $2,500
At the same time, Dencun’s impact on Ethereum price and market sentiment has been significant. Shin Forex, a prominent crypto analyst highlights that the break below the critical support level of 0.05 in the ETH/BTC pair has historically introduced substantial price corrections on Ethereum.
However, analysts highlighted the implications of this outage, predicting further declines to around $2,500 if Ethereum price falls below 0.04 BTC.
Currently, a bearish sentiment prevails in the Ethereum market, with the price hovering around $3,025. This reflects a modest increase of 0.76% over the past 24 hours amid current market fluctuations.
Also discover: CryptoQuant Report Identifies Absence of Whales in Bitcoin Uptrend Cycle