Ethereum’s ‘ultrasound’ money narrative could face challenges following the Dencun upgrade, according to CryptoQuant. Ethereum’s EIP-7702 aims to address concerns stemming from EIP-3074. Meanwhile, Ethereum’s recent price movement indicates it may be building momentum for a bullish run.
The latest price action for Ethereum (ETH) on Wednesday suggests it could be gathering momentum for a potential rally, as a recent CryptoQuant report highlights that its ultrasound money narrative may be at risk. Additionally, Ethereum co-founder Vitalik Buterin, along with other contributors, has proposed Ethereum Improvement Proposal (EIP) 7702 as a replacement for EIP-3074.
Daily Market Movers Digest: Ultrasound Money, EIP-7702, Ethereum Foundation
Ethereum is poised for some significant changes to its blockchain following recent developments. Here are the key market movers for the leading altcoin:
A recent report from CryptoQuant indicates that Ethereum has become more inflationary since the Dencun upgrade in March. After the Merge, which shifted Ethereum from Proof-of-Work (PoW) to Proof-of-Stake, the network saw a significant reduction in the growth of ETH’s circulating supply due to the high rate of gas fee burning.
However, the introduction of “blobs” in the Dencun upgrade reduced network activity in favor of greater scalability and lower user fees, leading to a notable decrease in gas fees burned.
“Prior to the Dencun upgrade, higher network activity on Ethereum resulted in more fees being burned, thus reducing the ether supply. However, since the Dencun upgrade, the total amount of fees burned has become decoupled from network activity,” CryptoQuant noted. This shift undermines Ethereum’s ‘ultrasound’ money narrative, as it implies the circulating supply could start to increase over time.
“We conclude that, given the current rate of network activity, Ethereum will no longer be deflationary, and the narrative of ‘ultrasound’ money is likely dead or would require a much higher level of network activity to regain traction,” CryptoQuant added.
Moreover, after concerns about EIP-3074, which was set to be part of the upcoming Pectra upgrade, Ethereum co-founder Vitalik Buterin, along with co-authors Sam Wilson, Ansgar Dietrichs, and Matt Garnett, proposed EIP-7702 as an alternative. This proposal addresses the issues raised by EIP-3074 and suggests a new direction for the Ethereum network’s development.
EIP-7702 introduces a new transaction type, allowing externally owned accounts (EOAs) to temporarily function like smart contracts during a transaction. Like EIP-3074, this proposal aims to enhance gas fee abstraction, batch transactions, and improve the user experience. However, it takes a step further by offering better compatibility with the ERC-4337 standard for smart contract wallets—addressing a limitation in EIP-3074—and being more adaptable for future changes.
Some members of the crypto community have speculated that EIP-7702 could replace EIP-3074 in the forthcoming Ethereum Pectra upgrade. An X user remarked, “It would probably make more sense to include 7702 in Pectra rather than 3074.”
Arik Galansky, VP of Technology at Fireblocks, also weighed in on the proposal, stating, “It’s been a long time since Ethereum introduced user-oriented changes instead of scaling-oriented ones, and this one hits the mark.”
Also Read: Ethereum Traders Show Uncertainty as SEC Delays Decision on Invesco’s ETH ETF Application
Meanwhile, the Ethereum Foundation appeared to be selling ETH again on Wednesday, after it transferred 1,000 ETH, valued at $3 million, to the middle multisig address 0xbc9, according to data from Spot On Chain.
This transaction is part of a broader pattern where the Ethereum Foundation has sold 1,766 ETH for 4.81 million DAI stablecoin at an average rate of ~$2,725 since the start of 2024. These ETH sales, typically executed in small batches via the same middle multisig address 0.bc9, often correlate with brief dips in Ethereum’s price, according to Spot On Chain.
ETH Technical Analysis: Ethereum May Be Building Momentum for a Bullish Run
The market was relatively quiet on Wednesday as Ethereum continued to hover around the $3,000 level. Despite the subdued activity, ETH derivatives volume for May has seen a substantial increase—almost 60% higher than Bitcoin’s derivatives volume, according to QCP.
QCP attributes this increase to market speculation over the Securities & Exchange Commission’s (SEC) upcoming decision on VanEck’s spot ETH ETF application, expected on May 23. This has led to an anticipation of heightened volatility, with many expecting the SEC to deny the spot ETH ETF applications, which explains the slight downward bias in the market.
Although current price trends suggest that ETH may continue to move horizontally over the coming weeks, historical data indicates that the largest altcoin might be building momentum for a bullish run. Given that ETH has traded in the $2,852 to $3,300 range for nearly a month, a slight bullish catalyst could push the price into a sustained breakout above the upper boundary of this range.
![](https://sollcrypto.com/wp-content/uploads/2024/05/Screen-Shot-2024-05-09-at-8.04.12-AM.png)