Bitcoin‘s value recently plummeted to $59,000 following a record peak, with the $10,000 fall attributed to widespread profit-taking. This market movement has not deterred investors, who now observe Ethereum‘s resilience, currently trading around $3,500.
Ethereum’s March Milestone
March marks a pivotal month for Ethereum with the anticipated Dencun update set to revolutionize its fee structure next Wednesday. The upgrade is expected to slash fees for Ethereum layer2 solutions by up to 90%, potentially boosting network activity and expanding user access to popular protocols.
This change is likely to intensify Ethereum’s competition with Solana and other networks by significantly lowering transaction costs, which could amplify Ethereum’s appeal. Despite reaching a yearly high of $3,822, Ethereum’s price is thought to have not yet fully accounted for this upcoming upgrade.
Factors Influencing Ethereum’s Value
Several reasons are propelling Ethereum’s value upwards. The imminent Dencun upgrade and the decision on Spot Ethereum ETF applications in May are primary drivers. The potential of stake income and infrastructure services growth also enhance the appeal of ETH ETFs. Additionally, negative inflation effects, resulting from a portion of transaction fees being burned, are reducing the supply of Ethereum. Significantly, there has been a 7.7% reduction in Ethereum exchange supply over the past 90 days, with current exchange levels at the lowest in 20 months, suggesting reduced selling pressure.
Recent data indicates that Ether futures open positions have climbed past $8 billion. This reflects a robust investor confidence in Ethereum’s growth trajectory, with $4,000 emerging as the next significant psychological milestone that the price is expected to breach soon.