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Ethereum has gone through a rollercoster week alongside Bitcoin with ETH dropping to as low as $3,086 on March 21, 2024. After painting the chart red over the recent days, the Ethereum price is recovering, with a 10% increase in its 24-hour trading volume. The crypto market is optimistic that the coin will bounce back and this time, it will soar to $5000. Let’s find out the possible factors that could push ETH to achieve this milestone.
Ethereum price today is $3,477, an increase of 2.47% over the past day. Its trading volume has soared 10% over the past 24-hours to record $13.48 billion. With a market cap of $418 billion, ETH is ranked the second largest cryptocurrency after Bitcoin, according to CoinMarketCap. The coin has 120 million ETH in circulation.
Some factors contribute to Ethereum potential Bounce Bak to $5,000
The Dencun upgrade is a significant hard fork for Ethereum, introducing crucial changes to its consensus and execution layers. It incorporates ephemeral data blobs (protodanksharding) through EIP-4844, aimed at reducing Layer 2 transaction fees.
Why is it important? Dencun enhances scalability and efficiency, which are crucial for Ethereum’s growth. It follows last year’s *Shapella upgrade*, building on Ethereum’s continuous evolution.
Ephemeral Data Blobs improves transaction processing efficiency. Transient Storage Opcodes, Beacon Block Root in EVM, and other enhancements, particularly on layer 2 scaling solutions whose transaction costs are expected to drop to near zero levels.
Dencun upgrade portrays a long-term impact on Ethereum. It strengthens Ethereum’s fundamentals, making the protocol more attractive for developers and users. Investors can anticipate improved network performance, potentially positively impacting Ether’s value.
Dencun represents a milestone in Ethereum’s journey, reinforcing its position as a leading blockchain platform. Investors perceive this upgrade as a market move, believing the next breakout could push Ethereum to $5,000, achieving a new ATH.
However, several blockchain experts are criticizing the Dencun upgrade.
In their view, Dencun is not a permanent solution because it depends heavily on third parties (referred to as Layer 2 scaling solutions) to ensure the effectiveness of all performance improvements. If the situation deteriorates, depending on these Layer 2 scaling solutions could result in various interoperability problems, division within the Ethereum ecosystem, and discord among developers working on Ethereum.
The Ethereum Dencun upgrade is live!
A key impact of this latest upgrade will be to reduce fees on the network, helping to ease congestion and improve scalability.
Learn more ➡️ https://t.co/G0aSDYyAYI pic.twitter.com/IVsoQ3HrYp
— Binance (@binance) March 13, 2024
Potential launch of new spot Ethereum exchange-traded funds (ETFs) in May could lead to Ethereum surging in value, similar to the impact of Bitcoin ETFs. Easy accessibility for investors could result in increased investment in Ethereum, further driving up its value.
However, analysts may be overly optimistic about the SEC’s approval process for these ETFs, as it took years for Bitcoin ETFs to gain approval. The likelihood of an SEC approval in May has decreased from 70% to 30%, accordingto Eric Balchunas, Bloomberg analyst. This is because there has been no communication from regulators since the applications were submitted. This lack of response raises doubts about the approval process for Ethereum ETFs and the potential for regulators to expand beyond Bitcoin. Investors should be cautious about the expectations surrounding the launch of spot Ethereum ETFs and consider the possibility of delays or rejections in the approval process.
3. Overall Cryptocurrency Industry
The crypto industry as a whole is experiencing increased adoption and interest. Ethereum’s plethora of use cases, including decentralized finance (DeFi), non-fungible tokens (NFTs), and smart contracts, positions it well for growth. If these trends continue, Ethereum could indeed reach the $5,000 milestone.
4. Bitcoin Halving
Bitcoin Halving may also play a part in the increase of ETH trading value. The event which occurs approximately every four years, has a significant impact on the cryptocurrency market. It might influence the price of Ethereum (ETH) in various ways. First, the halving reduces the supply of new coins entering the market. This scarcity can lead to increased demand as investors seek to diversify their portfolios. If Bitcoin’s price rises post-halving, other cryptocurrencies, including Ethereum, are likely to experience price increases due to this heightened interest.
Second, Bitcoin halvings generate excitement and speculation among investors. This sentiment can spill over to other cryptocurrencies. As people anticipate positive effects from Bitcoin halving, they may invest in alternative coins like Ethereum, driving up their prices.
While Ethereum has faced significant volatility, recent developments such as the Dencun upgrade, potential ETF launches, overall market trends, and the impact of Bitcoin halving offer reasons for optimism. However, it’s crucial to remain cautious and informed, as cryptocurrency markets are inherently unpredictable. Stay updated on developments within the crypto space to make well-informed decisions.
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