Key Points
- Ethereum’s price has been fluctuating below $3,000 amid the ongoing crypto market correction.
- Ethereum’s status as ultra-sound money is being questioned due to the Dencun upgrade and decreased transaction fees.
Ethereum, the second-largest digital asset, has seen its price dip below $3,000 multiple times in the past five weeks due to the ongoing cryptocurrency correction.
The price of Ethereum against the US dollar has been forming a descending triangle with a solid base of around $2,972 on the daily time frame.
Uncertain Price Movements
As the trading instrument nears the edge of the consolidation, a breakout on either side could result in significant price movements.
Veteran analyst Peter Brandt has noted that Ethereum’s price has not shown any definitive movement based on the price action study.
Ethereum has gradually been losing its ultra-sound money status following the recent Dencun upgrade.
The Ethereum network has been collecting fewer transaction fees from layer two projects since the upgrade in March 2024.
The Dencun Upgrade
“The Dencun upgrade has made Ethereum inflationary again, potentially killing the ‘Ultrasound’ money narrative as a structurally lower amount of transaction fees burned have not decreased the total supply of ETH enough to keep it deflationary,” noted Julio Moreno, head of research at CryptoQuant.
According to on-chain data provided by Etherscan, the amount of Ether burned on Wednesday, May 8, 2024, amounted to about 547 units, compared to as much as 7k units daily before the Dencun update.
Despite this, 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.
Most web3 projects, including gamifi platforms, require fast and ultra-cheap transactions to onboard more users seamlessly.
Political Debates
The Ethereum network has found itself in the middle of significant political debates in the United States, ahead of the final decision on VanEck spot ETH ETF on May 23.
The United States Security and Exchange Commission (SEC) has argued that Ethereum is a security and not a commodity like Bitcoin.
As a result, Wall Street analysts believe the US SEC will reject several applications of spot Ether ETFs later this month.
Meanwhile, former US President Donald Trump has expressed his support for all altcoins and reassured the crypto community that government resistance will end if he is elected 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’s price is gradually following Bitcoin’s price action, suggesting that the top altcoin may 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.
