24 Mar 2023 Morgan Hayze
Ethereum Spikes To Year-To-Date High, Will The Momentum Continue?
On March 23, the Ethereum decentralized finance (DeFi) ecosystem saw an increase in daily fees, increasing 9% over the course of 24 hours. The economics of Ethereum's proof-of-stake (PoS) tokens have changed to be deflationary as a result of the increase in Ether fees, and income has increased respectively by 10% in the same time frame.
The Ethereum network is moving forward, but policymakers are more inclined to intervene quickly to suppress the cryptocurrency market. Investor confidence may be suffering as discussions over whether Ether qualifies as a security token under the Howey test continue.
Investors are also anticipating the Ethereum Shanghai upgrade, which is scheduled for March 2023, and some say would free-staked Ether and perhaps raise sell pressure. Such uncertainty over Ethereum's future is likely contributing to why the price may face 6-month lows vs Bitcoin.
Experts are considering a scenario in which Ethereum might continue its upwards momentum after the upgrade, and on-chain data supports a promising short-term price outlook for ether.
The price of Ethereum increased when 1,755 ETH were burned by the PoS burning mechanism in the week before March 23. This indicates that Ethereum is getting more deflationary. Indeed, Ether was intended to become deflationary as a result of the Ethereum PoS transition, and on March 23, it hit an all-time low for token emissions of -0.1% annually.
The ARB airdrop from Arbitrum raises gas fees
The much-anticipated Arbitrum airdrop became available for qualifying wallets to grab the ARB token. More than 47% of the ARB that was airdropped was claimed in the first three hours after launch. Around 543 million tokens total, which were distributed to 282,663 wallets. In the Arbitrum network, however, fees for claiming the ARB airdrop have to be paid in Ethereum. As customers were able to claim the airdrop, Ethereum gas prices increased as people paid more for the speed of transactions.
In addition to the high fees, Uniswap's universal router and ETH transfers to Arbitrum also contributed to 1-day burns.
The Shanghai hard fork
In order for Ethereum to transition to a proof-of-stake consensus mechanism, it had to first deploy a beacon chain, which stored user ETH. Now, a progressive withdrawal of staked Ether on the Beacon Chain will be possible due to the much-anticipated Shanghai mainnet update.
Initial plans called for the Shanghai hard fork to start on March 14. However, Ethereum programmers announced a hard fork postponement till April on March 2. On-chain data indicates that the Shanghai hard fork won't result in significant sell pressure, although the price of Ether will probably stay unstable before the upgrade.
Bitsgap CEO Max Kalmykov is remaining positive about Ethereum’s price forecast, even if the update may cause increased volatility issues.
"Ethereum which is often referred to as the "silver" of the crypto sphere is a leader in the blockchain space. The forthcoming Shanghai upgrade could potentially result in significant fluctuations in the market; however, Ether's recent breach of the $1,400 resistance level suggests that its value might continue to climb." Kalmykov added.
Ether's price will continue to be weighed down by macro factors like inflation-driven interest rate increases and potential U.S. industry crackdowns, which will slightly limit the potential for short-term price growth. Long-term price growth drivers might include things like more regulatory clarity and a slowdown in interest rate increases.Ethereum eth Ethereum news cryptocurrency news crypto news ether Crypto Price Ethereum Price Defi Decentralized Finance