Ethereum (ETH) showcased signs of potential rally momentum on Wednesday, even as concerns arose regarding its ultrasound money narrative, as per a recent CryptoQuant report. Additionally, Ethereum Improvement Proposal (EIP) 7702, spearheaded by co-founder Vitalik Buterin and collaborators, emerged as an alternative to EIP-3074, signaling forthcoming updates for the leading altcoin.
The key market movers for Ethereum include:
A recent analysis by CryptoQuant underscored Ethereum’s shift towards inflationary tendencies subsequent to the Dencun upgrade in March. The transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) during the Merge phase prompted Ethereum to burn gas fees at a notable rate, resulting in a reduction in ETH’s circulating supply growth. However, post the Dencun upgrade, wherein the introduction of “blobs” aimed at enhancing scalability and reducing user fees, the rate of gas fee burning notably decreased.
CryptoQuant noted, “Before the Dencun upgrade, higher network activity on Ethereum led to higher fees burned, consequently reducing ether supply. However, post the Dencun upgrade, the total fees burned have become disconnected from network activity.” Consequently, the ultrasound money narrative associated with ETH faces a risk as its circulating supply potentially heads towards an increase over time.
Moreover, amid raised concerns surrounding EIP-3074, Vitalik Buterin and collaborators proposed EIP-7702 as an alternative solution. EIP-7702 introduces a new transaction type enabling externally owned accounts (EOAs) to temporarily function as smart contracts during transactions. In addition to abstracting gas fees and enhancing batch transactions, the proposal improves compatibility with the ERC-4337 standard for smart contract wallets, addressing a concern with EIP-3074 while ensuring future-proofing.
Speculation within the crypto community suggests that EIP-7702 could replace EIP-3074 in the upcoming Ethereum Pectra upgrade. A member remarked, “I think it would probably make more sense to include in Pectra than 3074.” Fireblocks’ VP of Technology, Arik Galansky, lauded the proposal, highlighting its focus on user-oriented changes, a shift from previous scaling-oriented endeavors.
Meanwhile, Ethereum Foundation’s ETH movements garnered attention as 1,000 ETH worth $3 million was transferred to middle multisig address 0xbc9 on Wednesday, in line with a trend observed since the start of 2024. Spot On Chain data revealed that the Foundation has sold 1,766 ETH for 4.81 million DAI stablecoin, often coinciding with brief Ethereum price declines.
In the technical analysis domain, Ethereum maintained stability around the $3,000 mark on Wednesday, with derivatives volume for May surging nearly 60% higher than Bitcoin’s, according to QCP. This surge is attributed to market anticipation of volatility surrounding the Securities & Exchange Commission’s (SEC) impending decision on Van Ecks’ spot ETH ETF application.
While the current price action suggests a potential horizontal movement in the coming weeks, historical data indicates Ethereum might be gearing up for a bullish trajectory. Onchain data reveals whale accumulation around the $2,852 to $3,300 range, indicating readiness for a potential price rally, with any bearish events presenting buying opportunities within this range.
