The price of Ether (ETH), the cryptocurrency fueling the smart-contract-enabled layer-1 Ethereum blockchain protocol, has been on the rise against a favorable macroeconomic backdrop. Investors are looking ahead to the upcoming “Dencun” upgrade, which promises to enhance the network’s data storage capacity.
ETH reached new highs for the year, reaching the $2,440s on Thursday before a slight retracement below $2,400. Over the past 24 hours, it gained approximately 3.5%, over 6.5% in the last seven days, and over 17% in the last 30 days, according to CoinMarketCap.
Meanwhile, in the traditional markets, US stocks continued their upward trajectory on Thursday, with the S&P 500 inching within 1% of the record highs set in early 2022, surpassing 4,800. This ascent coincides with declining US yields and the US Dollar Index (DXY), driven by speculation that the Federal Reserve may soon initiate interest rate cuts.
Anticipations of more relaxed financial and liquidity conditions have provided significant momentum for the cryptocurrency market in recent months, and these factors seem poised to offer continued support to Ethereum (ETH).
ETH’s volatility is expected to surge on Friday due to a notable event—the largest quarterly expiry on record for ETH options, with a staggering $3.36 billion set to expire, according to data from The Block.
Apart from this imminent volatility event, attention is likely to remain focused on ongoing Ethereum-related developments. These include the positive macroeconomic backdrop, the upcoming Dencun upgrade, and a growing sense of anticipation regarding potential approvals for spot Ethereum ETFs in 2024. These factors contribute to the overall outlook for ETH in the near term.
Dencun Upgrade Approaches in January
Ethereum developers are gearing up for the implementation of the anticipated “Dencun” upgrade. This upgrade introduces a new blockchain feature known as proto-danksharding, aimed at reducing fees for layer-2 scaling protocols and enhancing the blockchain’s scalability by expanding data storage capacity.
According to information published on Ethereum’s GitHub repository, testing for the Dencun upgrade will commence on Ethereum’s Goerli testnet on January 17. Subsequently, it will go live on the Sepolia testnet on January 30 and then on the Holesky testnet on February 7.
While a specific date for the Dencun upgrade to be deployed on Ethereum’s mainnet has not been announced, if all goes well during the testing phases, it could potentially be implemented as early as February.
Price Prediction – Can Ether (ETH) Reach $4,000?
Despite Ether’s year-to-date gains reaching around 100%, several positive factors in the macroeconomic, network (due to near-term upgrades), and adoption (with anticipation for spot Ethereum ETFs) realms indicate that risks for the ETH price are inclined towards the upside in the short, medium, and longer terms.
From a technical standpoint, the bullish outlook is reinforced. Ethereum (ETH) has demonstrated robust support at the crucial long-term level of $2,150 on multiple occasions in recent weeks. Additionally, it has maintained its position above both the 21-day and 50-day moving averages (DMAs), suggesting that the market is still under the control of the bulls.
Given these indicators, the bulls are likely to aim for a swift upward movement towards the significant long-term level of $3,600, representing the peak observed in April 2022. This potential target further underscores the positive sentiment and momentum surrounding Ethereum in the current market conditions.
The positive indicators and potential bullish scenarios suggest the possibility of swift near-term gains for Ether, potentially reaching as much as 50%. This would mark a significant recovery from its 2022 lows, representing a more than fourfold increase.
Hitting the mid-$3,000s could signal a more aggressive bull market for the broader crypto space, potentially leading to a retest of all-time highs, which are close to $5,000. In such a scenario, Ether could see increased momentum, possibly rallying above $4,000 in the year 2024. These projections are based on the current positive market dynamics, technical support, and the anticipation of favorable developments in the crypto landscape.
