These cryptos bleed ahead of Ethereum Dencun upgrade

Whales have shed their Ethereum Layer 2 token holdings ahead of the Dencun Hard Fork scheduled for Wednesday.
MATIC, IMX, OP, ARB and MNT prices decline on Tuesday while Ethereum price sustains above $4,000.
Ethereum Layer 2 tokens could offer a “buy the dip” opportunity ahead of Dencun upgrade, which will lower transaction costs.

Prices of Ethereum Layer 2 tokens are declining sharply on Tuesday, ahead of Ethereum’s Dencun Upgrade lined up for Wednesday. The upgrade is expected to reduce the transaction cost for Layer 2 tokens that scale the Ethereum network.

Polygon (MATIC), ImmutableX (IMX), Optimism (OP), Arbitrum (ARB) and Mantle (MNT) prices dropped between 3% and 5% on the day..

Also read: Ethereum price unlikely to be moved by SEC ETF decision as approval odds diminish, analysts say

Layer 2 tokens bleed

Ethereum is facing criticism from crypto experts for its upcoming upgrade as it focuses on reducing transaction costs for Layer 2 solutions and not the underlying blockchain.

Justin Bons, Founder and CEO of CyberCapital, argues that Ethereum is now “fully committed to mediocrity.” Bons said in a recent tweet on X that the Layer 1 chain has zero plans to scale its underlying blockchain and Ethereum is pushing users to Layer 2 chains instead. The Dencun upgrade has indeed divided the ETH community into supporters and critics.

ETH is now fully committed to mediocrity

With ZERO L1 scaling plans! Fees will remain high far into the foreseeable future

They gave up on sharding & they are not even trying to parallelize the EVM

Feats competing L1s have accomplished, while ETH pushes users to L2s instead!
— Justin Bons (@Justin_Bons) March 12, 2024

The Dencun upgrade is a day away and L2 tokens have noted a sharp decline in their prices.

The drop could be considered a “buy the dip” opportunity for traders waiting to jump in on the narrative of L2 gains following the decline in transaction fees. MATIC, OP, and ARB prices declined 4% in the past 24 hours. IMX price dropped 5% on Binance and MNT yielded nearly 3% losses to holders in the past day.

Some large wallet investors, popularly known as whales, are swapping their L2 tokens for stablecoins or other cryptocurrencies, on-chain data shows.

Spotonchain tracked two large wallet investors’ which recently shed their L2 token holdings. The first wallet, identified as dForcenet, deposited 2.45 million ARB worth $5.05 million to Binance, and the second swapped 1.03 million ARB worth $2.13 million for USDC. Both transactions occurred on Tuesday, likely contributing to the overall decline in L2 token prices.

Ethereum price hit its 2024 high of $4,093 on Binance earlier today. The altcoin has experienced a pullback since then and is exchanging hands at $4,026, at the time of writing.

Share: Cryptos feed

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.