• Ethereum network deployed Dencun Upgrade on March 13, causing a flurry of L2 restoration queries.
  • Token terminal reports a surge in Ethereum L2 bridge deposits.
  • ETH price remains well below the $4,000 threshold after four days of attempted breach.

Ethereum (ETH) price breached the $4,000 psychological level on Monday but has failed to hold above it this week despite four successive attempts. The thrust came on the heels of the ‘buy the rumor sell the news event’ as the network geared up for the Dencun Upgrade, deployed on March 13.

Also Read: Ethereum Dencun Upgrade causes a flurry of L2 restoration queries

Ethereum L2 bridge verticals soar

Ethereum’s Dencun upgrade was a value addition for the community, delivering reduced transaction fees and confirmation times on Layer 2 (L2) networks. This is expected to open up so many more use cases for crypto.

Cognizant of this theory, freelance services marketplace Fiverr and OpenAI’s chatbot ChatGPT registered increased numbers of search users looking for how to restore an L2 back online.

Recent reports indicate that Ethereum L2 bridge deposits have increased with Arbitrum (ARB) leading the pack, according to data from Token Terminal.

The surge in deposits points to growing activity and usage of the L2 solution, likely inspired by the reduced transaction costs, enhanced network efficiency and cost effectiveness. The surge in deposits also points to growing adoption, reduced congestion on the Ethereum Mainnet, increased confidence and trust, and a general increase in use cases. The direct implication of the Dencun upgrade appear to be:

  •  It has inspired a positive reception of the benefits drawn from L2 solutions, including but not limited to faster confirmation times and reduced transaction costs.
  • The network is performing better with users enjoying lower gas fees for their on-chain transactions.
  •  Users and projects are now more open to depositing their funds into L2 bridges as they believe in the security of their assets because the L2 solution is effectively interoperating with the Ethereum main chain.
  • More decentralized applications (dApps), decentralized finance (DeFi) protocols, and other Ethereum-based services could be built atop Layer 2, expanding the use cases and utility of L2 solutions.

Ethereum L2 solutions, such as Optimistic Rollups and zk-rollups, help prevent the congestion and high transaction fees on the Ethereum network. To do this, they offload some of the transaction processing to secondary layers while still benefiting from the security of the Ethereum main chain.

Unfortunately, the purported growing adoption and utilization of Layer 2 scaling solutions is not yet reflected in Ethereum price, which remains below the $4,000 threshold. The histogram bars of the Awesome Oscillator are flashing red, showing the bears have a strong presence in the ETH market. However, their presence well above the midline shows the market is still leaning in favor of the upside.

A flip of the $4,093 range high into support would produce a higher high, likely encouraging more buy orders to facilitate a stronger uptrend.

ETH/USDT 1-day chart

Conversely, the Relative Strength Index (RSI) is dropping, suggesting falling momentum. If the bears have their way, Ethereum could provide a buying opportunity around the $3,722 support. If this buyer congestion level fails to hold, however, a lower low below this base would give the bears a chance to recover the market. 

Ethereum development FAQs

What is the next big Ethereum software update?

After the Merge, the Ethereum community is looking at the Sharding upgrade next, which has been slated for sometime later in the year. The development can be summarized in four words, “scalability through more efficient data storage.” The software update will increase the capacity of the blockchain, widening the amount of data that can be stored or accessed. At the same time, all services running atop the Ethereum blockchain will enjoy significantly reduced transaction fees.

What is the difference between hard fork and soft fork?

A fork is the splitting of a blockchain after developers agree and proceed to implement upgrades. The decision comes after these developers reach a consensus for a software upgrade. The ensuing part will see one part continue with the status as is, while the other one will proceed with new features combined with the former ones. A hard fork basically entails permanent divergence of a new side chain from the original one, while a soft fork is doing the same, only difference being that it is temporary.

What is EIP-4844?

EIP-4844 is an improvement proposal for the Ethereum network. The upgrade promises reduced gas fees, which is a valuable offering considering the high transaction cost that continues to daunt crypto players. It has been a long-standing concern for the Ethereum network. The proposal is also referred to as “proto-Danksharding,” with an unmatched ability to increase the speed of transactions on the Ethereum blockchain. At the same time, it helps to reduce the transaction cost as everything becomes decentralized.

What is gas in the context of Ethereum?

Gas token is a new, innovative Ethereum contract where users can tokenize gas on the Ethereum network. This means they can store gas when it is cheap and start to deploy the gas once the market has shifted to the north. The use of Gas token helps to subsidize high gas prices on transactions, meaning investors can do everything from arbitraging decentralized exchanges to buying into initial coin offerings (ICOs) early.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

Is Altcoin Season here as Bitcoin reaches a new all-time high?

Is Altcoin Season here as Bitcoin reaches a new all-time high?

Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.

More Altcoin News
Shanghai court confirms legal recognition of crypto ownership

Shanghai court confirms legal recognition of crypto ownership

A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.

More Cryptocurrencies News
BTC hits an all-time high above $97,850, inches away from the $100K mark

BTC hits an all-time high above $97,850, inches away from the $100K mark

Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.

More Bitcoin News
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.

More Shiba Inu News
Bitcoin: New high of $100K or correction to $78K?

Bitcoin: New high of $100K or correction to $78K?

Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP