• 50,000 Ether has been burned in the past five days, and the altcoin is heading toward a supply shock.
  • Traders are expecting Ethereum 2.0 to compete with Bitcoin for cryptocurrency market dominance. 
  • Experts state that Ethereum has better fundamentals than Bitcoin due to deflationary pressure from EIP-1559 implementation.
  • Key on-chain indicator reveals that there is little resistance in Ethereum's upward climb. 

Ethereum has surpassed $3,400, a significant psychological barrier, and the altcoin has one last resistance barrier at the $4,078 level before it rallies to a new all-time high. 

Ethereum's on-chain activity signals that ETH is poised for the second leg of bull run

The spike in non-fungible token activity has led to a rise in the number of active addresses and the transaction volume on the Ethereum network. 

NFT sales volume on the largest peer-to-peer marketplace, OpenSea, has surged to $1.9 billion since the beginning of August. Most NFTs are valued in Ethereum, and the spike has triggered an increase in transaction fees on the Ethereum network. 

Despite the rise in fees, the implementation of EIP-1559 has led to the burn of 150,000 Ether so far, of which 50,000 was burned in the past five days. 

Lucas Outumuro, head of research at blockchain intelligence firm IntoTheBlock, noted that Ethereum's daily issuance has fallen below Bitcoin's for the first time. 

The current Ethereum on-chain activity is at a similar level seen during the onset of the first leg of the bull run in April 2021. 

Since the latest Ethereum Improvement Proposal (EIP-1559) went live in the London Hard Fork, Ethereum's daily issuance has turned negative on several occasions. Traders are now anticipating the "merge," which is the change from a Proof-of-work to a Proof-of-stake consensus mechanism. 

The "merge" marks a drop in Ethereum supply, equivalent to two Bitcoin halvings. A sudden plunge in supply supports the narrative of a supply shock and a "Triple Halving" event. 

Since EIP-1559 went live, Ethereum is being pulled out of circulation through burning. The overall impact of the protocol can be considered equivalent to a single Bitcoin halving. Traders are, therefore, expecting Ethereum 2.0 to compete with Bitcoin for cryptocurrency market share and replace it. 

Bitcoin has enjoyed dominance and gained popularity through its first-mover advantage since its launch. However, analysts expect Ethereum's rising relevance, demand and "supply shock" to push Ether to flip BTC. 

A key indicator, the Global In/Out of the Money (GIOM) graph, classifies addresses based on whether they are profiting, breaking even or losing money at the current price level. GIOM is useful in predicting support and resistance levels for crypto assets. 

Ethereum surpassed the $3,400 barrier, a psychologically important one, and the indicator reveals that there is little resistance in the path to a new all-time high. The last level of on-chain resistance is at $4,078, where over 1.5 million addresses purchased Ether. 

Global In/Out of the Money (Ethereum)

Global In/Out of the Money (Ethereum).

FXStreet analysts have set the next price target for ETH at $4,000. 

 

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.

Cryptos feed Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Bitcoin Weekly Forecast: BTC’s Q3 close and what to expect in Q4?

Bitcoin Weekly Forecast: BTC’s Q3 close and what to expect in Q4?

Bitcoin price is trading above two crucial levels, suggesting a stable foothold. Combining this outlook with a bullish divergence signal, BTC holders should expect a favorable outcome. However, since the third quarter will end in a few hours, there is bound to be abnormal volatility in the market, which could trigger massive moves in either direction, so investors need to be cautious. 

More Bitcoin news

Shiba Inu price: Shiba Eternity download day the biggest bullish catalyst in SHIB history?

Shiba Inu price: Shiba Eternity download day the biggest bullish catalyst in SHIB history?

Shytoshi Kusama, the project lead for Shiba Inu, has dropped a teaser about Shiba Eternity for the SHIB community. Proponents expect the launch of the collectible card game to be a bullish catalyst for SHIB.

More Shiba Inu News

Staking is coming to Chainlink this December as LINK price stands firm

Staking is coming to Chainlink this December as LINK price stands firm

LINK is trying to find its feet in the wake of declines that followed its rejection from resistance at $8.40. Bulls have managed to sustain a generally up-trending market and Chainlink is up nearly 17.50% from its September low at $6.56.

More Chainlink News

Ethereum Classic bulls take charge, a retest of $30 on the cards

Ethereum Classic bulls take charge, a retest of $30 on the cards

Ethereum Classic price ranges with no directional bias in sight. This trend could continue unless Bitcoin decides to do something. Regardless, investors should prepare for a minor downtrend before ETC rallies. 

More Ethereum Classic news

Bitcoin: BTC’s Q3 close and what to expect in Q4?

Bitcoin: BTC’s Q3 close and what to expect in Q4?

Bitcoin price has developed a bullish divergence with RSI, hinting at more upside. Despite the optimistic technicals, investors should expect volatile swings before the end of the third quarter of 2022. 

Read full analysis

BTC

ETH

XRP