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Ethereum’s Dominance Increases by 19.13% as ETH Price Breaches $4,000

Ethereum (ETH) has been on overdrive ever since it broke the previous record of $1,400 set in 2018.

The world’s second-largest cryptocurrency has enjoyed a remarkable bull run, which has seen it break the psychological barrier of $4,000 for the first time in its six-year history. Its price is currently at $4,140 at the time of writing, according to CoinMarketCap.

This uptrend has resulted in Ethereum’s dominance surging to a record high of 19.13%, as acknowledged by crypto data provider Documenting Ethereum.

Furthermore, Ether-Bitcoin implied volatility spread is rising, which indicates upcoming shifts in the market. It, therefore, means crypto traders might be shifting their primary focus to Ethereum instead of Bitcoin.

With a market capitalization of $470.66 billion, ETH is just a stone’s throw away from flipping the value of America’s largest bank JP Morgan Chase, which has a valuation of $488.09 billion.

Ethereum’s MVRV-Z score is at the highest point since 2018

According to on-chain metrics provider Santiment:

“ETH’s MVRV-Z score, which is the ratio between market cap and realized cap, and standard deviation of market cap, is now at its highest point since January 2018.”

Ethereum’s record-breaking trend has also seen the total value locked (TVL) in the ETH 2.0 deposit contract hit an ATH of $18.18 billion.

Ethereum 2.0 went live in December 2020, and it seeks to change the current proof-of-work consensus mechanism to a proof-of-stake framework, which is touted to be more environmentally friendly and cost-effective.

The proof-of-stake algorithm allows for the confirmation of blocks to be more energy-efficient and requires validators to stake Ether instead of solving a cryptographic puzzle. This consensus mechanism is also expected to tackle various challenges like high gas fees and scalability.

As Ethereum’s journey to the moon continues, time will tell whether the next target of $5,000 will be breached any time soon.

The amount of ETH burned will continue to increase as transaction fees are burned

Since the completion of the Merge network upgrade six months ago, the quantity of ether (ETH), the second-largest cryptocurrency in terms of market value, has been steadily decreasing across exchanges. In September 2022, the Ethereum network went through a significant upgrade that consisted of switching from a proof-of-work (PoW) network to a proof-of-stake (PoS) network during an event that was referred to as the Merge.

The quantity of accessible ETH that is now languishing on exchanges continues to decrease, as shown by on-chain data that was published by the cryptocurrency analytics company Santiment. Since the Merge, the amount of ETH available on exchanges has decreased by 37%. It is a positive indicator when there is a consistent decrease in supply on exchanges. This is because there is less ETH accessible on the market for buying and selling.

Before the Merge, there were a total of 19.12 million ETH worth $31.3 billion trading hands on exchanges in the month of September. As of the second week of February, the number had dropped to 13.36 million ETH, which corresponds to a value of $19.7 billion.

A significant portion of the Ethereum supply is now being shifted into self-custody, while the Shanghai upgrade is drawing near and many traders choose staking as an investment strategy instead. The next version for Ethereum, known as Shanghai, is expected to release in the month of March. Stakeholders and validators will be able to remove their holdings from the Beacon Chain after the Shanghai hard fork, which will combine more upgrade suggestions for network advancements and enable for this functionality.

At the now, 14% of the entire supply, or 16 million ETH, is staked on the Beacon Chain. This amounts to nearly $25 billion at the prices that are currently in effect, and it is a significant quantity that will gradually become liquid following the Shanghai hard fork.

Since it became deflationary after the London upgrade, the total quantity of ETH on the market as a whole has also decreased, in addition to the ongoing decrease in the amount of ETH stored on exchanges. The fee-burning mechanism that was first implemented as part of Ethereum Improvement Proposal (EIP)-1559 is where the deflationary model can be found.

Since the London upgrade in August 2021, a total of 2.9 million ETH has been burnt, which would have had an equivalent value of around $4.5 billion in today’s currency.

Tim Beiko announced Shapella upgrade

Tim Beiko, a key developer for Ethereum, has revealed that the next planned update for Shapella would take place on February 28. When epoch 56832 arrives, the Shapella network update will become operational on the Sepolia network.

The names Shanghai and Capella (Shapella) are now being considered for the forthcoming Ethereum hard split. On the execution layer client side, the fork is referred to by the name Shanghai, whereas on the consensus layer client side, the upgrade is referred to by the name Capella.

On the execution layer, some major Ethereum improvement proposal (EIP) enhancements include push withdrawals on the Beacon Chain and warm coinbase. Warm coinbase should not be confused with the cryptocurrency exchange. By using a new “system-level” operation type, the push withdrawals will make it possible for validators to withdraw funds from the Beacon Chain and send them to the Ethereum Virtual Machine. Warm Coinbase, on the other hand, has the potential to be a game-changer by lowering the network costs that builders must pay.

The piece of software known as Coinbase is what builders on the network use to be credited with newly issued coins. Each and every new transaction on the network is required to have many interactions with the Coinbase program. Because the program takes more time to “warm up,” the charge for the first engagement is higher than the fee for subsequent interactions, which decrease as the number of contacts increases. However, with the implementation of EIP-3651, the coinbase software will stay warm from the start, and users will be required to pay a lesser gas charge in order to access it.

The initial unique historical roots have been replaced by complete and partial withdrawals for validators, as well as independent state and block historical accumulators. These are some of the major modifications that have been made to the consensus layer.

The ability to make a partial withdrawal enables validators to continue verifying transactions while withdrawing ether (ETH) rewards in amounts greater than 32 ether. Validators have the option to entirely abandon the system, collect all 32 Ether and awards, and call it quits if they wish to make a full withdrawal.

The next update will provide validators the ability to transfer their staked Ether (stETH) from the Beacon Chain to the execution layer so that they may spend it. In addition, the update would bring about modifications to the execution and consensus layers, as well as the addition of new functionality; hence, it would be an essential upgrade after the Merge.

In order to take advantage of the Sepolia update, however, stakers and non-stakers who run nodes are need to bring their nodes up to date with the most current versions of the Ethereum client. The next phase would be the release of the Shanghai upgrade on the Ethereum Goerli test network, which is anticipated to begin in the month of March. This would be the following step after the deployment of the Sepolia upgrade.

Ethereum Price Analysis: Navigating the Consolidation Phase

The current uptrend in Ethereum’s price began on June 15, 2023, when the price was at a low of $1626. Following this low point, Ethereum began to rise, and by June 19, the 5-day MA crossed above the 10-day MA for the first time, signaling a bullish trend. Since this crossover, the 5-day MA, currently around $1930, has not crossed below the 10-day MA, which stands at approximately $1908. Whenever the 5-day MA has touched the 10-day MA, Ethereum’s price has bounced back, indicating that the 10-day MA is a strong support level and that Ethereum remains in an uptrend.

However, the 4-hour chart tells a different story. The highest prices for Ethereum have been progressively lower, indicating a downtrend on this timeframe. This divergence between the daily and 4-hour charts suggests that the market is at a critical juncture.

Further, bearish divergence in both the RSI and MACD on the daily chart suggests that the uptrend is losing momentum and may even reverse. These crypto trading signals strongly indicate a potential shift in market dynamics.

Source: Binance

As for the ETH/BTC trading pair, it has been weak recently, even as Bitcoin’s price has been in an uptrend. This suggests that Ethereum’s performance, currently priced at 0.06277 BTC, has been lagging compared to Bitcoin. At present, the ETH/BTC pair is trading below the 5-day MA but above the 10-day MA, indicating a period of consolidation.

In conclusion, our Ethereum price analysis suggests a period of consolidation with minor fluctuations, between the 10-day MA and $1937. Traders should closely monitor key support and resistance levels, currently at around $1850 and $1950 respectively, for potential breakout or breakdown scenarios. As Ethereum’s price currently stands at $1912.41, staying updated with the latest market movements is essential for making informed trading decisions