Ethereum's burn rate may rise if L2 demand rises
If Trump wins the US election, Bitwise CIO expects Ethereum to appreciate more than Bitcoin.
Ethereum might challenge $4,093 annual high barrier if $2,817 becomes support.
Ethereum (ETH) rose 0.5% on Wednesday and seeks to break $2,817 barrier in the coming days as US elections approach. The top cryptocurrency might rise more if Layer 2 demand rises after gaming developer Cartridge's Starknet chain trial.
Ethereum might deflate if L2 demand grows
Blobspace on Ethereum saw its fourth price discovery since the Dencun upgrade in March after Cartridge's Starknet L2 trial. Blobspace provides reduced transaction costs for Ethereum Mainchain L2 storage.
Ethereum engineers added blobspace to Dencun in March to reduce Layer 2 network expenses. However, the fee cut caused ETH's burn rate to decline, expanding supply and making the leading cryptocurrency inflationary again. Additionally, Mainchain fee collection decreased.
Whether L2s are parasitic to Ethereum has been a prominent crypto community discussion. The story may alter when Starknet logged 857 transactions per second from Cartridge's flippyflop game, which momentarily overloaded blobspace.
The test has made some community members reconsider L2s, with some estimating that blobspace might increase the ETH burn rate over time as L2 demand develops, raising costs.
Tim Robinson's simulation reveals that if L2s expand Ethereum by 10,000 TPS in the future, the daily ETH burnt might reach $45 million at $3,000. This burn rate will cause Ethereum prices to rise due to deflation.
Ethereum may outperform Bitcoin if Trump wins.
In an interview with Yahoo Finance, Bitwise CIO Matt Hougan stated Ethereum has far more upside than Bitcoin if Donald Trump wins the US presidential election. He said that a Trump presidency may bring to a new SEC that would clarify currency regulations.
"I think the regulatory clarity you're talking about actually matters more for the so-called altcoins, for Ethereum on down," he said. If Trump wins, I predict altcoins to surge more than Bitcoin since they are more vulnerable to regulatory threats. I believe both are rising."
According to Coinglass, Ethereum ETFs saw $7.6 million net inflows on Tuesday.
ETH may hit annual high resistance if it reclaims $2,817.
After $25.77 million in ETH futures liquidations, Ethereum is up 0.5% to $2,680. Long liquidations totaled $12.28 million and short liquidations $13.49 million.
ETH has broken over its 200-day SMA and is approaching $2,817, a significant rectangle channel resistance level. If ETH turns $2,817 barrier into support, it might climb over the 100-day SMA and challenge $3,237 resistance.
The $2,817 level was a crucial support level for about four months until the early August crypto market crisis.
The 50-day SMA is likewise rising toward the 200-day SMA. A 50-day SMA over 200-day SMA would imply a strong bull market and might push ETH beyond $4,093 annual high barrier.
Bullish pressure is increasing as the RSI and AO are above their midpoints. The Stochastic Oscillator is reaching oversold, suggesting ETH may correct shortly.
A daily candlestick closing below the May 27 declining trendline will disprove the bullish argument.
