Ether’s Rise: What’s Driving the Price and What Lies Ahead?

Ethereum's Price Demonstrates Significant Strength this Week Cointelegraph Investigates the Factors Behind the Surge

3 reasons for Ethereum’s (ETH) nearly breaking the $2.5K resistance this week

📈 Since December 27, Ether (ETH), the native token of the Ethereum network, has seen a 5.5% increase in value, although it failed to break above the $2,400 resistance. Traders are now curious about the factors responsible for Ether’s rise and whether these factors will continue to be significant. Let’s dive in and discover the driving forces behind this surge in value!

Ether’s Price Reaches a 19-Month High as Traders Anticipate a Rally above $2,500

💪 On December 28, Ether reached an intraday high of $2,446, a level last seen over 19 months ago. Surprisingly, this impressive surge occurred while the broader cryptocurrency market capitalization remained flat at $1.68 trillion. This suggests that Ether’s price could continue its bullish momentum toward $2,500, despite transaction fees exceeding $5. While $5 might not seem excessive, it can be burdensome for most decentralized application (DApp) users.

❓Q: What is driving the bullish momentum for Ether? A: Various factors contribute to Ether’s upward trajectory, including increased network and ecosystem use, dominance in DApps deposits, and expectations of further improvements through network upgrades.

⚖️ One might be tempted to believe that competing blockchains are gaining relevance, especially when critics claim that the Ethereum network has failed due to capacity limitations for scaling and privacy solutions at the base layer. This negative narrative has been fueled by the recent outperformance of Solana (SOL) and Binance Coin (BNB), which have gained 78% and 44% respectively over the past 30 days. An experienced Solana ecosystem developer, Matty Taylor, even raised concerns about this issue on social media. 🗣️🌐

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Some info for anyone pushing the narrative that Ethereum is best positioned to become the RWA/institutional chain:

TradFi institutions are even more sensitive than memecoin traders to fees, speed & overall infra performance.

See why Visa chose @Solana.https://t.co/tNGpgvNekG

— mattytay (@mattytay) December 28, 2023

❗Q: Is Ethereum losing its ground to competing blockchains? A: While competing blockchains are gaining attention, the undeniable success of Ethereum’s layer-2 blockchains and the dominance of the Ethereum Virtual Machine (EVM) suggest that Ethereum remains a force to be reckoned with. Additionally, the Ethereum network’s total value locked (TVL) of $29.6 billion invalidates much of the negative assessment. In comparison, BNB Chain holds a mere $3.6 billion TVL, while Solana lags further behind at $1.4 billion, according to DefiLlama.

📊 One might argue that not every DApp requires a massive TVL, and even the decentralized finance (DeFi) industry is striving to maximize the usage of its deposits. Therefore, other metrics, such as transactions and the number of active addresses, better reflect adoption levels.

📊 Apart from its absolute layer-1 dominance, the Ethereum network has witnessed a 38% growth in volumes over the past 7 days, outperforming both BNB Chain and Solana. Noteworthy highlights on Ethereum include Uniswap’s $20 billion volume, Balancer’s $9.4 billion, and Cowswap’s $0.9 billion. In comparison, BNB Chain’s leading application, PancakeSwap, accumulated $4.2 billion in the same period.

Ethereum’s Layer-2 Scaling Solutions: Exceeding Expectations in Activity

🔝 When we consider Ethereum’s layer-2 solutions, the ecosystem surpasses any competitor in terms of active addresses engaging with DApps. Alongside the established Polygon network, the privacy-focused zkSync Era has propelled aggregate Ethereum rollups’ unique active addresses (UAW) to an impressive 2 million in just 7 days. This zero-knowledge rollup is expected to launch a token soon, further increasing demand for its network usage.

❓Q: What are the advantages of Ethereum’s layer-2 scaling solutions? A: Ethereum’s layer-2 scaling solutions provide improved scalability, reduced fees, and enhanced efficiency for decentralized applications. These solutions are driving increased activity and engagement within the Ethereum ecosystem.

🖋️ Moreover, Ether’s price surge has received an additional boost from research published by Ethereum’s co-founder, Vitalik Buterin, on December 28. The research proposes a method to reduce the load on validators by cutting the number of required signatures by 70%, making the process more quantum-resistant. The proposal offers three different solutions, ranging from decentralized staking pools to a “light” staking method and a rotation between accountable committees.

🚀 Finally, Ethereum’s upcoming upgrade, known as Cancun, is scheduled for testing starting on January 17. This upgrade aims to lower transaction fees and introduces new features for bridges and staking pools. Notably, it includes Ethereum Improvement Proposal (EIP) 4844, also known as “proto-danksharding,” which enhances the efficiency of rollup networks by temporarily storing transaction data in a new format called “blobs,” leading to significant reductions in layer-2 transaction fees.

💡 Based on increased network and ecosystem usage, dominance in DApps deposits, and expectations of further improvements through upgrades, Ether’s rally is poised to solidify its leadership in terms of processing smart contracts and staking mechanisms. The future looks bright for Ether and the Ethereum network!

📚 References: – Bitcoin Retracts from $36K, Uptrend Resumes, Says QCP Capital – Solana’s SOL Dips 100%: Slips Back From BNB in Crypto Ranking – Solana (SOL) price down today?

🙌 Don’t keep this valuable information to yourself! Share this article with your friends and colleagues to keep everyone informed about the latest developments in the world of Ethereum and blockchain technology. Let’s ride the Ether wave together! 🌊💫

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