Ethereum Reaches $4,000 Again After Nine Months

The price of Ethereum has surged past the $4,000 mark, marking a return to levels last seen in March 2024 after months of subdued price performance.

Data from CoinMarketCap shows that Ethereum’s price has increased by 2.8% within a day and has risen 10.7% over the past week.

Ether’s recent upward momentum follows a prolonged period of trading below its 200-day exponential moving average, a key level of dynamic support.

Currently, its relative strength index (RSI) is approximately 71, indicating it is entering overbought territory.

From August to early November, Ether’s price exhibited sideways movement until a rally began on Nov. 6, triggered by Donald Trump’s electoral victory.

Analysts predict that Ether could reach $7,000 in this market cycle, driven by record inflows from exchange-traded funds and the strength of Ethereum’s developer ecosystem.

The release of the Dencun upgrade in March 2024 significantly reduced fees for Ethereum layer-2 scaling networks, leading to a dramatic 99% collapse in layer-1 revenues.

Lower fees resulted in diminished demand for Ether, the native asset of the Ethereum smart contract platform.

However, network fees began recovering in September.

According to Token Terminal, Ethereum’s base layer generated approximately $10.9 million in fees on Dec. 5, a stark contrast to the $500,000 range recorded during the peak of fee suppression in August.

The steep decline in layer-1 revenues led some investors and analysts to speculate that the Ethereum network was being undermined by competition from layer-2 networks.

In response, longtime Ethereum Foundation researcher Justin Drake proposed introducing a native sequencer on Ethereum’s layer-1 network, operated by Ethereum validators.

A sequencer enables layer-2 scaling solutions to organize transactions.

Drake argued that implementing a layer-1 sequencer could enhance composability between decentralized applications and rollups within the Ethereum ecosystem.

Sources:

https://cointelegraph.com/news/ether-price-returns-4000

https://coinmarketcap.com/

https://www.tradingview.com/chart/g7xkPkTa/?symbol=BITSTAMP%3AETHUSD

https://tokenterminal.com/explorer/projects/ethereum?v=MmE5Yjk5MzliOTNjNWE4MDI4ZTk2ODhi