Explore the possible triggers behind Ethereum’s next breakout above $4,000
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Despite the recent pullback, Ethereum user activity and demand from U.S. investors remains high.
The Dencun upgrade is designed to expand the Ethereum network and will go live in March 2024.
Even with the recent pullback, user activity and demand for Ethereum remains strong, especially among U.S. investors.
In March 2024, Ethereum (ETH) briefly traded above the $4,000 mark for about 48 hours, indicating strong interest in the cryptocurrency.
Exchange supply shortage and Dencun upgrade
ETH supply is reportedly low on exchanges, which reduces the likelihood of a significant sell-off.
Additionally, demand for ETH reached its highest level this year, coinciding with the launch of the Dencun upgrade in mid-March.
Jesse Pollack, founder and protocol lead at Coinbase Base, said the upgrade is the first step in a long-term strategy to expand the Ethereum network to handle hundreds of thousands of transactions per second.
US investor demand and Coinbase premium
Coinbase Premium, which measures the percentage difference between Ethereum prices on Coinbase Pro and Binance, reached its highest level since May 2023, indicating a surge in demand from U.S. investors.
However, this trend has been affected by the recent correction in the cryptocurrency market.
The index has been trending higher since February, peaking at 0.23 on March 8, but fell to -0.1 by March 17, reflecting a shift in investor sentiment.
The shift shows that while U.S. investors were initially enthusiastic about Ethereum, they quickly changed their stance as the price fell below $4,000.
Despite the pullback, the number of active addresses on Ethereum trended upward in the first half of March, surpassing January highs, indicating rising user demand.
Meanwhile, open interest and funding rates point to short-term bearish sentiment in the market.
Additionally, Ethereum wallets holding over 10,000 tokens recorded profits earlier this month, demonstrating that whale behavior can provide valuable insights to traders and analysts.
Despite some bearish indicators, certain on-chain indicators point to a bullish outlook for Ethereum, and unless the price falls below $3,100, the price trend is likely to remain positive.
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