The price of ETH, the main token of the Ethereum blockchain, has risen by 6% after a volatile start to the month. One of the reasons for this is the launch of the Ethscriptions protocol, an analog of the Ordinals protocol, which has provided users with another way to create non-fungible tokens (NFTs) and other digital assets. Considering the recent precedent set by "ordinals" BRC-20 and DRC-20, Ethscriptions has the potential to cause significant increases in ETH transaction volumes and fees.
Contents:
- Increase in transaction volumes on the Ethereum network
- Impact of Ethscriptions on ETH price in light of the Fee-burn mechanism
- Investors ready to buy the dip in ETH price
- Potential movement of Ethereum price
Increase in transaction volumes on the Ethereum network
The number of transactions conducted on the Ethereum network continues to grow: from June 13 to June 18, it increased from 928,540 to 974,650. If Ethscriptions attracts more attention in the coming weeks, this figure will grow even further.
One of the key features of "ordinals" is the sharp increase in transaction volumes. From Bitcoin (BRC-20) to Dogecoin and Litecoin (LTC-20), they have constantly been criticized for network congestion and spikes in fees.
Impact of Ethscriptions on ETH price in light of the Fee-burn mechanism
After transitioning to the Proof-of-Stake consensus algorithm, the Ethereum network implements the Fee-burn mechanism, which reduces net issuance by over 99%. The launch of Ethscriptions could unintentionally have a positive impact on the price of ETH.
The increase in the number of transactions will result in a greater amount of ETH coins being burned and taken out of circulation. The reduction in supply, in turn, may serve as a bullish signal for strategic investors.
Investors Ready to Buy the Dip in ETH Price
In the past two weeks, several cryptocurrency exchanges have delisted a number of high-market-cap altcoins as the U.S. Securities and Exchange Commission (SEC) classified them as securities. Many holders of these coins are now redirecting their capital towards:
- Ethereum
- Bitcoin
However, those looking to invest in ETH want to buy the asset at the most advantageous price. The aggregated order books of exchanges show that users have placed buy orders for 111,030 tokens below the $1600 mark. Meanwhile, only 85,200 coins are being offered for sale in this price range.
Potential Movement of Ethereum Price
Considering the factors mentioned above, the price of Ethereum is likely to rise to $1900. However, for the bulls to be confident in a positive forecast, the asset must overcome resistance with an aggregated balance of 6.44 million ETH at an average price of $1857.
In the event of a drop below the critical support zone at $1700, control of the situation will shift to the bears. However, the 3.04 million wallets that acquired 4.28 million Ethereum at a maximum price of $1701 are likely to prevent further downward movement. If they fail to do so, the price may decline to $1530.
Comments