• 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

Bitcoin: Retraces to around $75,000 after hitting new all-time high

Bitcoin: Retraces to around $75,000 after hitting new all-time high

Bitcoin (BTC) edges slightly down on Thursday and trades at around $74,900 after hitting a new all-time high (ATH) of $76,400 on Wednesday, buoyed by the victory of the crypto-friendly candidate Donald Trump in the US presidential election.

More Bitcoin News
Ethereum price jump spurs most significant ETF inflows in six weeks

Ethereum price jump spurs most significant ETF inflows in six weeks

​After a positive momentum in crypto markets following the outcome of the US presidential election, spot Ether exchange-traded funds (ETFs) in the United States saw their highest inflows in six weeks.

More Ethereum News
Top trending meme coins PEPE, BONK, and FLOKI achieve double-digit gains following Trump’s victory

Top trending meme coins PEPE, BONK, and FLOKI achieve double-digit gains following Trump’s victory

The prices of top trending meme coins Pepe (PEPE), Bonk (BONK) and FLOKI (FLOKI) experienced double-digit gains following Trump’s victory on Wednesday. The technical outlook suggests that the three meme coins hover around key levels, and the breakout could push these coins higher.

More Crypto News
SUI hits new all-time high fueled by Trump election win

SUI hits new all-time high fueled by Trump election win

Sui (SUI) edges down on Thursday and trades at around $2.24 after hitting a new all-time high (ATH) of $2.38 earlier in the day, buoyed by the victory of a crypto-friendly candidate, Donald Trump, in the US presidential election.

More SUI News
Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin: New all-time high at $78,900 looks feasible

Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.

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