The crypto market is closely monitoring developments around Ethereum 2.0 as it will introduce a major upgrade around June 2022. Moving on to “The Merge,” one of the key positives is the decline in the ETH fee.
According to the on-chain data provider Santiment, the ETH fee has fallen by as much as 90% in the past six months, allaying users’ concerns. It adds that this could also have contributed to the ETH price surge. The data provider states:
Ethereum charges were much more affordable than we’ve seen in the past 8+ months. The average gas price is just $5.81. In comparison, the average cost rose to $69.57 on May 11, 2021 and $62.85 on November 8, 2021.
In addition, data provider Santiment also mentions that Ethereum (ETH) shows a greater correlation with the S&P 500 than Bitcoin (BTC). It adds:
Ethereum, not Bitcoinis the most important asset that remains closely correlated to the #SP500‘s performance. And since the #FOMC announcement 3 weeks ago, this was good news for $ETH† see if #fed news causes downswings for the May #FOMC Updating.
If the Fed rate hikes, the stock market could be heading for a correction in the short term. We see the same spillover in the crypto market and the price of Ethereum (ETH). Crypto market analyst Michäel van de Poppe states that in the event of a correction, ETH has a buy zone around $3,100.
This is what I mean on #Ethereum†
We may look for that HL in the coming week as the market begins to make a slight correction.
If it continues like this, I’ll be looking for the green area around $3,100 (just below the recent low) to take liquidity and reverse. pic.twitter.com/ALyjXs5lGm
— Michaël van de Poppe (@CryptoMichNL) Apr 5, 2022
Ethereum 2.0 and The Merge
One of the major developments surrounding Ethereum is the introduction of the EIP-1559 protocol which introduces a combustion mechanism and causes deflationary pressure on the Ethereum (ETH) price. Market analyst Lark Davis explains†
†With supply growth of -2.8% per year after the merger, #ethereum will see about 3.3 million ETH burn per year. By the end of the decade, total ETH supply will fall below 100 million. In other words, we are burning the equivalent of ALL ETH currently on exchanges!!!!”
He further adds that when the Ethereum 2.0 staking feature went live last year, the ETH price jumped 68%. Davis expects a big surge in ETH price after the June upgrade.
When #ethereum 2.0 strike went live, the price was up 68% in the previous month and then nearly 600% in the following 6 months.
The next major ETH upgrade is coming at the end of June… pic.twitter.com/xMiybBg4OB
— Lark Davis (@TheCryptoLark) Apr 6, 2022
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or the publication is not responsible for your personal financial loss.
About the author
Bhushan is a fintech enthusiast and has a good flair in understanding financial markets. His interest in economics and finance draws his attention to the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In his spare time, he reads thriller-fiction novels and sometimes explores his culinary skills.
This post Ethereum Fee Down 90% Since November 2021, ETH Shows Stronger Correlation With S&P 500
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