The effects of the Ethereum merge are finally starting to show. Ethereum prices saw a 7% increase in prices after faking out below a strong support price. Why is Ethereum price up? Well, it has to do with a fundamental factor and a technical one. In this article, we’re taking a closer look at both in this Ethereum price prediction article.
What is Ethereum Crypto?
Thanks to Ethereum, blockchain tech received its first application of smart contracts. After Bitcoin, it has established itself as the second-largest cryptocurrency market since its introduction in 2015. The network token for the Ethereum network is ether.
With the development of Smart Contracts, which allow for the creation of decentralized apps, the Ethereum Blockchain was able to establish itself. In recent years, the Ethereum ecosystem has grown incredibly. Ethereum is the most popular blockchain in the DeFi and NFTs sectors. Proof-of-work was formerly used by the network for consensus, however, Proof-of-Stake was recently adopted during the Merge.
What Happened After the Ethereum Merge?
Ethereum investors and supporters may now exhale with relief following the successful Ethereum Merge. The network’s biggest stride in many years happened without a hitch. We may now focus on the short-, medium-, and long-term effects of the Ethereum merger.
In general, it should be emphasized that after moving to Proof-of-Stake, Ethereum will use up to 99.9% less energy. The primary justification for migrating to Proof-of-Stake was the reduced energy usage and increased transaction efficiency. Ethereum should thereby become more effective, scalable, and sustainable.
Why is Ethereum Price UP?
Fundamental Perspective: Ethereum supply dropped
Ether’s positive technical picture is further influenced by the current supply shortage. Since October 8, the quantity of ether has decreased by over 6,000 ETH. That represents the first deflationary action taken by the Ethereum network since switching from proof-of-work (PoW) to proof-of-stake (PoS) via the Merge one month ago, where more ETH is being destroyed than produced.
What’s the relationship between ETH supply and ETH price?
In order for validators to confirm users’ on-chain Ethereum transactions, users must pay them so-called gas costs. In the past, more users on the Ethereum network meant higher gas prices and more money for validators.
However, a part of the gas tax is permanently withdrawn from Ether circulation following the August 2021 EIP-1559 release. To sum it up in an easy way, when demand is strong, more ETH is burned, hence higher ETH prices.
Technical Perspective: Green Hammer Appears!
Ethereum prices showed a strong increase following the ETH burnt, as prices shot as high as 7% in the past 24 hours. This caused prices to jump from a low of $1,155 all the way to the current price of $1,330. Consequently, a red hammer candlestick formed.
This technical indicator is often very bullish. The bulls could still fend off the bears, but they were unable to raise the price back to its initial level. Consequently, prices are expected to rise toward the resistance price area of $1,430.
Ethereum Price Prediction – Is Ethereum bullish again?
The short answer to this is sadly, no. Once prices reach the resistance level, they are expected to fall again. Due to ongoing macro-warnings brought on by the United States Federal Reserve’s interest rate increases to high inflation, Ethereum’s long-term outlook leans unfavorable. Ether’s persistently positive connection with American stocks means that it is still vulnerable to these concerns.
