Ethereum, the second-largest cryptocurrency by market capitalization, ended June with a price decline; however, experts identify several signals that could lead to potential recovery.
Decrease in Layer-2 Fees and Its Impact on Ethereum
According to Layer-2 data, the Dencun update, implemented on March 13, 2024, significantly reduced the cost of writing bulk transaction data to the main blockchain for Layer-2 applications. Consequently, Ethereum's base blockchain revenue plummeted from $30 million annually to $500,000 in the first quarter.
The drop in staking yield also drove some investors away from the altcoin giant. However, funds shifted towards Ethereum-based scaling coins like Optimism, Arbitrum, and Mantle.
Increase in Institutional Acquisitions of Ethereum
On the institutional front, SharpLink Gaming's late-May acquisition of Ethereum worth $30 million stood out. This acquisition strategy indicated confidence among investors, boosting the company's stock nearly 20% in just eight days. Additionally, a whale acquisition recorded at $39 million on June 22 also indicated confidence, decreasing the Ethereum supply on exchanges.
Future Prospects and Predictions
Lastly, New York-based Bit Digital announced on June 25 its intention to sell $34 million worth of Bitcoin in favor of Ethereum. The management aims to stake the acquired coins to gain early access to Layer-2 yields. These successive major demands reflect investors' desire to seize Ethereum's potential in July and beyond.
While Ethereum has faced short-term challenges, positive signals in the form of institutional acquisitions and economic activity within the ecosystem could lead to significant growth opportunities moving forward.
