Ether's price climbs back to $4K for the first time since March.
Ether has made a notable comeback, reclaiming the $4,000 price level for the first time in months after a prolonged period of lackluster performance and bearish sentiment.
The cryptocurrency, currently priced at $3,991.49, has risen by 2.8% in the past 24 hours and posted a significant weekly gain of 10.7%, according to data from CoinMarketCap. This recovery marks a turning point for Ether, which has struggled to regain momentum since March 2024.
Ether’s resurgence is particularly noteworthy as it had been trading below its 200-day exponential moving average (EMA), a dynamic support level often used to gauge long-term market trends. The recent rally pushed Ether back above this critical threshold, signaling renewed bullish momentum.
The relative strength index (RSI) currently stands at approximately 71, indicating that Ether is entering overbought territory, a zone often associated with heightened buying activity and potential corrections.
From August through early November, Ether experienced prolonged sideways price action, reflecting indecision in the market. This period of stagnation ended on Nov. 6 when Ether’s rally gained momentum, coinciding with Donald Trump’s electoral victory, which appears to have sparked optimism in the market.
Market analysts are optimistic about Ether’s future, with some projecting a price target of $7,000 in the current market cycle. This bullish outlook is supported by record inflows from exchange-traded funds (ETFs) and a thriving developer community actively building on the Ethereum blockchain. The ongoing development and adoption of the Ethereum ecosystem are expected to drive long-term growth for Ether.
The Dencun upgrade, introduced in March 2024, played a pivotal role in reshaping Ethereum’s fee structure. This upgrade drastically reduced fees for Ethereum’s layer-2 scaling solutions, leading to a 99% decline in layer-1 revenues. While this initially dampened demand for Ether, the trend began to reverse in September as network fees started to recover.
Token Terminal reports that Ethereum’s base layer generated $10.9 million in fees on Dec. 5, a sharp increase from the $500,000 range seen during the height of fee suppression in August. This recovery underscores Ethereum’s resilience and its ability to adapt to changing market dynamics.
Despite these gains, Ethereum faced criticism earlier in the year. Some investors and analysts questioned the sustainability of its layer-1 network, citing cannibalization from competing layer-2 solutions as a potential threat. However, the Ethereum community has proposed innovative solutions to address these concerns.
Justin Drake, a researcher at the Ethereum Foundation, suggested introducing a native sequencer on Ethereum’s layer-1 network. Operated by Ethereum validators, this sequencer would enable efficient transaction ordering for layer-2 scaling solutions.
By improving composability between decentralized applications (dApps) and rollups, the sequencer would enhance the overall functionality and interoperability of the Ethereum ecosystem. This proposal aims to strengthen Ethereum’s position as a leading smart contract platform while addressing the challenges posed by its evolving fee structure.
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