Ethereum (ETH) stays above $1,700 support despite a 1.2% dip; a significant gas limit increase and Layer-Zero efficiency update proposed; technical analysis hints at a bullish target of $2,875; overall, ETH’s performance shows some resilience as it aims for recovery.
Ethereum (ETH) continues to hover above the crucial $1,700 support level, despite registering a 1.2% decline in the past 24 hours. As the second-largest cryptocurrency by market cap, it’s been battling back against Bitcoin lately. In fact, during this period, ETH fell 2.9% to $1,783.53 while Bitcoin managed to gain 1% and climbed back to $95,100, making some crypto enthusiasts a tad anxious.
Recent developments in the Ethereum ecosystem could shift its trajectory, particularly the proposal from Dankrad Feist of the Ethereum Foundation. This Ethereum Improvement Proposal (EIP-9698) aims to ramp up Ethereum’s gas limit by a staggering 100 times over four years. What this means is raising the current limit from 36 million to a whopping 3.6 billion gas, which, if successful, could crank the transaction capacity up to over 2,000 transactions per second (TPS)!
From a technical standpoint, Ethereum has shown some resilience against Bitcoin, managing to reclaim its local range. Currently, it’s forming a falling wedge pattern after last week’s impressive 12% gains. Analysts are eyeing a bullish reversal, setting a price target of $2,875. Key support levels to keep an eye on include the immediate $1,700 support, with a critical level at $1,449 and major resistance looming at $1,861, while a psychological target of $2,000 also beckons.
In light of criticisms, particularly from Cardano’s founder, Charles Hoskinson, Vitalik Buterin has unveiled an update addressing scalability concerns through a Layer-Zero upgrade. He suggests a major shift from the current Ethereum Virtual Machine (EVM) to a more efficient zkVM system that employs RISC-V standards. The research suggests this transition could allow Ethereum to run 832 times more efficiently than the current EVM interpreters. Notably, this could lead to a 95.7% reduction in proving cycles and a 30-fold increase in throughput with GPU acceleration.
Furthermore, proposals for a dynamic application layer fee structure have surfaced from community members Kevin Owocki and Devansh Mehta. Their idea involves using a square root formula to reduce fees proportionally as the funding capital increases. This approach would help to foster a more sustainable environment for smaller developers while still benefitting the overall Ethereum ecosystem. Once an application’s funding hits $10 million, fees would be capped at 1%.
Interestingly, Ethereum’s transaction fees have dipped to five-year lows, largely due to a slowdown in base layer activity, making these reforms potentially crucial to retain competitive viability against rivals like Solana, which has captivated more developers than Ethereum recently.
On the weekly performance front, Ethereum is up 12.4%, while Bitcoin sits at 10.6%. Yet, over the monthly spectrum, ETH’s growth of 6.0% falls short behind Bitcoin’s more impressive double-digit rise. This indicates that there’s some churn happening in terms of capital as investors try to navigate through these fluctuations. The Fisher Transform indicator currently shows strong momentum at 2.22, reflecting overbought conditions but suggesting enduring strength as well. While a slight pullback isn’t impossible, the mid-term still tilts towards the bulls.
To keep a close watch, failure to maintain support around the Parabolic SAR level at $1,569 might derail the bullish outlook, with $1,385 looming as a potential bearish target.
