Here’s Why Ethereum (ETH) Price May Not Fall Under $3000
The world’s second-largest cryptocurrency Ethereum (ETH) has had a solid run this year. Last week, the ETH price gave a momentary breakout above $3300 levels. However, it faced rejection twice at these levels.
At press time, ETH is down 2.64% in the last 24 hours trading at $3081 levels as of press time. But an improvement in Ethereum fundamentals shows that it is less likely for the ETH price to tank under $3000 levels. As per on-chain data provider Santiment, the Ethereum network growth has touched a one-month high. It writes:
Ethereum is hovering at the $3,000 level right now, and behind the curtains, we’re seeing that network growth has been steadily rising this month. New addresses being created on the $ETH network is a nice leading indication of where prices move next.
On the other hand, the Ethereum exchange outflows throughout the month of July and august have been relentless. Data from Glassnode shows that the exchange outflows amid the ETH price rebound and the NFT craze. However, since the EIP-1559 launch, there’s no clear impact on exchange flows.
Ethereum London Upgrade Boosts Network Capacity
The Ethereum network capacity has grown by 9% following the London upgrade earlier in August this month. Post the EIP-1559 implementation on August 5, the Ethereum network’s average usage of daily gas has surged by 9% since the upgrade was live.
The daily gas used indicates the overall network capacity. This number jumped from 92 billion to over 100 billion. It is one of the most notable changes on the network since its 17% rise on April 21. On Reddit, Ethereum co-founder Vitalik Buterin gave three reasons why the network capacity surged post the London upgrade.
- The London hardfork delayed the Ethereum Ice Age increased the complexity of PoW mining algorithm. This resulted in longer block times. Buterin writes: “This is a ~3% difference in block speed, which explains 3% out of the 9% increase in on-chain gas usage”.
- Before London hardfork, there was unused block space as the maximum gas used was set at 15 million. Now, post the upgrade, this value becomes a target rather than a limit.
- Buterin also noted that the 1559 implementation isn’t perfect in targeting the 15% base fee for burning. Thus, Buterin writes: “Ethereum users can rejoice in the unintentionally 6% increased capacity that London brought”.
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