Ethereum‘s recent upgrade, Dencun, promised to rev up its engines, aiming to make the network a speed demon at lower costs. But guess what? Ether’s price didn’t get the memo. Instead of zooming, it decided to take a nosedive. It’s like planning a grand entrance at a party, only to trip at the doorstep. Ether’s price behavior post-upgrade was like a replay of the old “buy the rumor, sell the news” scenario. The crypto rallied hard, crossing the $4,000 checkpoint for a victory lap first time since the digital ice age of December 2021. Yet, the week closed with Ether looking at a 7.5% shrink in its value.
According to the number crunchers at CryptoQuant, Ethereum was playing hard to get, pricing itself at its snobbiest since that 2021 peak. On the day of the upgrade, the market value to realized value (MVRV) ratio for Ether stood at a haughty 2.0. In plain speak, Ethereum was feeling twice as expensive as what the average Joe paid for it, leaving investors sitting on unrealized gains about as big as 50%. And while Ether ended the week with a slight limbo under $3,600, the upgrade itself wasn’t to blame. The network was already buzzing with activity, and the Ether supply was getting as scarce as honest politicians, dropping to its lowest since August 2022.
A Quick Peek Under Ethereum’s Hood
What makes this dip intriguing is the technical bravado behind Wednesday’s upgrade. It was a hit, with network activity and supply dynamics in the green. The total Ether supply decided to play limbo, hitting its lowest mark just before Ethereum’s switch to proof-of-stake, dubbed the “Merge.” Thanks to Ethereum behaving like a beehive of transactions, the fees went sky-high, burning more fees in the process and shrinking the Ether supply. It’s like Ethereum decided to go on a diet by burning off the extra calories from transaction fees. This scarcity trick is something long-term Ether investors have their bets on. They’re crossing fingers, hoping that all these network facelifts will make Ethereum the belle of the blockchain ball, outshining its rivals like Solana.
Ether’s 2024 performance, with a 60% gain, was eyeball to eyeball with Bitcoin, drawing investors’ eyes towards the Dencun upgrade and the tantalizing tease of spot Ether ETFs possibly getting the nod in the U.S. come May. However, despite these rosy prospects, Ether’s price decided to play hardball, taking a tumble over the $4,000 mark, unable to stick the landing.
Ether’s Highs and Lows: A Roller Coaster Ride
As the dust settles, Ether trades at a less-than-glamorous $3,574, with the market cap looking a bit bruised. Bitcoin, on the other hand, managed to dust itself off over the weekend, leaving Ether in a bit of a sulk. However, not all is doom and gloom. A staggering 89% of Ether holders are still in the black, showcasing a resilience that’s commendable in the face of market jitters.
Diving into the numbers, key on-chain data throws a spotlight on the $3.7K mark as a tough nut to crack, with a hefty stash of Ether parked there by about 991,000 addresses. It’s like a financial Fort Knox, signaling a strong resistance level for any price hikes. As the market watchers play the game of thrones with support and resistance levels, the $4,000 mark stands tall as a psychological Everest to conquer.
On the charts, Ether is playing shy, ducking below the $3,700 mark and the comfort of the 100-hourly Simple Moving Average. Resistance is putting up a fight near $3,650, with Ether facing a hill to climb to shake off the bearish vibes. Looking ahead, if Ether manages to swing past these hurdles, we might see a rally towards $3,925 and perhaps a flirt with the $4,000 resistance again.
On the flip side, if Ether can’t muster the strength to break past the resistance, we might see a retreat to lower grounds, with supports waiting at $3,520 and $3,500. Should the bears sharpen their claws, Ether could find itself in a tougher spot, possibly sliding further down the slope.
