Ethereum: Will Dencun, Inscriptions spur ETH’s price?

• Ethereum saw a surge in activity due to rising interest in Inscriptions.
•  A large amount of ETH got unstaked due to Celsius and Figment.

Recently, Ethereum [ETH] experienced a massive uptick in network activity, partly driven by an increasing interest in Inscriptions.

Gas usage on the rise

Inscriptions constituted 77% of all Ethereum transactions for a brief period. This surge in Inscriptions contributed to a concurrent increase in gas usage on the network.

The influx of addresses, attracted to the network through Inscriptions, could positively impact Ethereum by enhancing its overall activity and engagement.

Inscriptions made up 77% of Ethereum txs for a few hours yesterday, a first for the L1

src: https://t.co/q6ZUx8QT6v pic.twitter.com/vDoflH0ko2

— hildobby (@hildobby_) January 15, 2024

However, amidst this positive development, Ethereum could face a challenge in the form of significant staked ETH redemptions.

According to an X (formerly Twitter) post, the start of January saw the largest staked ETH redemption since the Shanghai Upgrade. Notably, a substantial 656,200 ETH was fully withdrawn.

Even though the unstaking was a result of the behavior of bankrupt crypto lender Celsius and staking service provider Figment, this withdrawal could potentially impact Ethereum’s staking ecosystem and affect market dynamics.

Last week was the largest staked ETH redemption (Excl. Rewards) since the Shanghai Upgrade with 656.2k ETH (~$1.6B) being fully withdrawn

85% of the withdrawal is contributed by Figment + Celsius https://t.co/Xr8RWPWBPH pic.twitter.com/8yY4BE3RB3

— Tom Wan (@tomwanhh) January 15, 2024

Progress on the development front

Looking ahead, Ethereum is gearing up for the Dencun upgrade. In the next 24 hours, the Dencun upgrade will be deployed on the Goerli testnet. This upgrade introduces blobs to the testnet which is also known as “protodanksharding.”

This introduction aims to reduce Layer 2 transaction fees, which can help Ethereum in terms of scalability and cost-effectiveness.

Goerli is forking this Wednesday (or Tuesday night, for parts of the world!). If you haven’t done so yet, update your node 🤖! https://t.co/2MlxBtUo0X

— timbeiko.eth ☀️ (@TimBeiko) January 15, 2024

Despite these advancements, Ethereum’s market performance saw a decline in its price, trading at $2,529.86 at the time of writing. Over the last 24 hours, ETH experienced a decrease of 0.28%.

Despite the price decline, the MVRV ratio continued to grow. This signaled that a significant number of addresses were holding profitable positions.

While this might incentivize some addresses to sell their ETH, potentially impacting the price negatively, the Long/Short difference provided a contrasting perspective.

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The growing Long/Short difference suggested a higher number of long-term holders compared to short-term holders.

Long-term holders, being less likely to sell, can contribute to price stability and resilience in the face of short-term market fluctuations.

Source: Santiment