The cryptocurrency Ether (ETH) has seen a slight increase of over 1.0% on Wednesday, hovering around the $1,870 mark. This small boost is attributed to the US Consumer Price Index inflation data, which came in broadly as expected, slightly increasing expectations that the Fed’s tightening cycle has ended. Nevertheless, Ether remains well within this week’s sub-$1,900 range, down approximately 7.5% compared to last week’s highs above $2,000.
ETH investors have been feeling uneasy due to the recent influx of meme coins, particularly new wave meme coins like Pepe (PEPE), and their impact on the Ethereum blockchain. An increase in transaction fees stems from higher demand for meme coin transfers on the Ethereum blockchain, taking up available block space. According to Etherscan, the average transaction fee is around $18, having recently risen above $27, its highest level in approximately one year.
Supporters of high fees argue that they represent the high demand for the blockchain, suggesting that Ethereum adoption is on the rise. Additionally, since fees are paid in ETH, higher fees indicate a greater demand for ETH among blockchain users. However, the high transaction fees also highlight the scalability issues faced by the Ethereum blockchain, which critics claim hinder its path to mainstream adoption.
The Ethereum Foundation is working to address these challenges, planning to implement upgrades like “danksharding” to increase transaction capacity and reduce fees in the coming years. At the moment, ETH/USD is consolidating within the recent $1,800-$2,000 range, leaving investors questioning the future of Ether. Short-term positive technical momentum appears to have waned, with ETH currently below its 21 and 50-Day Moving Averages (DMAs).
Some technicians believe a dip to resistance-turned-support in the $1,700 area is a near-term possibility. Regardless, longer-term technicals remain promising, as ETH stays well within its 2023 uptrend and would need to fall under $1,600 to be threatened.
With macro conditions anticipated to ease in 2023, more ETH tokens are expected to move into the staking contract, accelerating the Ether supply’s deflation rate. In light of the recent success of the Shapella upgrade, ETH should continue its gradual ascent in 2023. Glassnode revealed in a past report that, since the Shapella upgrade enabled staked ETH withdrawals, “the mechanics… for both incoming and exiting validators have played out as intended, with Ethereum’s consensus mechanism remaining stable throughout the process”.
This stability is expected to reduce longstanding engineering challenges, positively impacting both the security of the network and the economy built upon it.
Source: Cryptonews
