ETH is facing a major challenges as it no longer fits the ultra sound money. The users were fascinated after the adoption of the Ethereum Improvement Proposal (EIP)-1559. The proposal also included a plan to burn a part of the transaction fees. This would help in the reduction of ETH supply thereby making it a deflationary asset. But today’s market trends have done this around turn.
The first issue regards the decrease on supply of Ethereum. It is no longer decreasing at the expected rate, thus causing doubt regarding its deflationary characteristics. This change is mainly caused by lower activity on-chain both in terms of transaction fees and Ether tokens being burned. The situation has sparked controversy among the prospective investors and analysts who have been keenly observing the supply chain of Ethereum.
Summing up the above concerns, Ethereum is in front of a potentially problematic technical situation. There is a “rectangle pattern” on the Ethereum’s price chart at the moment. This pattern implies that there may be some consolidation of the price. It might be fluctuating between a given range, which may be due to the uncertainty of the market. This means that if Ethereum fails to get past this level of resistance then the downside risk in the cryptocurrency truly on.
The changes in Ethereum and the disappearance of the “ultra sound money” status or the stagnation in attempts to climb key resistance levels signify shifts in the market. While Ethereum remains in the uncertain stage and tries to overcome all these challenges, the market observers pay much attention to the further developments in the sphere of cryptocurrencies.
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