Ether (ETH), the digital currency backing the Ethereum blockchain, known for its smart contract capabilities, recently saw a modest increase of just above 1.0%, trading around the $1,870 mark on Wednesday.
This slight uplift during the day was influenced by the US Consumer Price Index inflation figures, which matched general predictions, indicating persistently high rates. These figures also stirred beliefs that the Federal Reserve’s tightening phase might have reached its end.
However, Ether’s current value continues to hover below this week’s peak of $1,900 and is approximately 7.5% lower than the previous week’s highs of over $2,000.
Certainly, ETH enthusiasts are growing increasingly concerned about the effects of the recent surge in popularity of meme coins, especially the emerging ones like Pepe (PEPE), on the Ethereum network.
The transaction fees have seen a noticeable increase lately, as the heightened demand for transferring meme coins on the Ethereum network consumes the available block capacity.
According to Etherscan, the prevailing average transaction cost is roughly $18, but it had recently peaked at over $27, marking its highest point in about a year.
Is ETH Adoption on the Rise?
Many argue that elevated fees indicate a strong demand for the blockchain, signifying that Ethereum’s adoption is increasing.
Moreover, since these fees are paid using ETH, steeper fees denote an augmented demand for ETH among the blockchain’s users.
However, these soaring transaction fees also underscore the scalability challenges confronting the Ethereum network. Detractors argue that these challenges obstruct its journey towards widespread adoption.
In response, the Ethereum Foundation, the entity accountable for the blockchain’s maintenance and development, plans to introduce enhancements like “danksharding” to enhance transaction throughput and reduce fees in the near future.
Price Prediction – Where Next for Ether (ETH)?
With ETH/USD stabilizing within the recent $1,800-$2,000 range, investors are pondering its next move.
The positive momentum observed in the short term seems to have lost its vigor, as ETH now trades below its 21 and 50-Day Moving Averages (DMAs).
Some technical analysts believe that a decline towards the $1,700 mark, which once acted as resistance and has now turned into support, might be on the horizon in the near future.
However, when considering longer-term trends, things appear optimistic. ETH continues to maintain its upward trajectory set in 2023 and would require a dip below $1,600 to truly challenge this ongoing trend.
With the broader economic conditions predicted to become more favorable in 2023, coupled with an anticipated increase in ETH tokens being locked into staking contracts, an accelerated rate of Ether supply deflation, and the recent success of the Shapella upgrade, ETH’s upward trajectory seems poised to continue through the year.
In a recent analysis, Glassnode remarked that following the implementation of the Shapella upgrade, which allowed for the withdrawal of staked ETH, “the mechanics… for both new entrants and those exiting validator roles have functioned as planned, with Ethereum’s consensus protocol exhibiting stability throughout.”
They further added, “This is set to mitigate long-existing engineering hurdles, resulting in positive implications for both the network’s security and the economic framework it supports.”