Crypto analytics firm CryptoQuant’s latest report casts doubt on Ethereum’s status as “ultra-sound money” after the implementation of the Dencun Upgrade in mid-March. This upgrade, designed to reduce fees and enhance network scalability has accidentally made Ethereum a more inflationary asset.
However, Analysts note a slowdown in the rate of ETH burning, will cause the Ethereum price to fall near by $2500.
Backfiring Dencun Upgrade
The CryptoQuant report highlights that the Dencun upgrade 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.
Meanwhile, this has caused Ethereum’s supply to increase rapidly, contrary to expectations of deflation post the 2022 Merge. Following the merger in 2022, Ether experienced deflation, with the total supply decreasing from 120.491 million to 120.097 million by September 2022.
CryptoQuant’s report highlights a 400,000 token increase in ETH supply since April, indicating a departure from the deflationary path.
ETH Price Correction Ahead: $2500
In parallel, the impact of Dencun on Ethereum’s 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 in Ethereum.
While, analysts highlighted the implications of this breakdown, predicting further declines to around $2,500 if Ethereum’s price falls below 0.04 BTC.
Presently, bearish sentiment prevails in the Ethereum market, with the price hovering around $3,025. This reflects a modest 0.76% increase over the last 24 hours amidst ongoing market fluctuations.
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