After a turbulent start to the month, Ethereum (ETH) price has gained 6% over the past week. The emergence of a new “Ethscriptions” protocol is likely to trigger dramatic ETH price movements in the coming weeks. Will the bullish buyers hold the $1,650 support?
On June 17, developer Tom Lehman launched “Ethscriptions” —an Ethereum-native Ordinals protocol that “enables non-financial and arbitrary data to be written into the main Ethereum blockchain.”
According to its creator, the protocol currently only allows images. But, in the future, users will be able to inscribe other file types under 96 kilobytes.
The launch was a relative success as early adopters created more than 30,000 “Ethscriptions” within the first 18 hours. Considering the recent precedence set by Bitcoin’s BRC-20 and Dogecoin’s DRC-20 ordinals, ‘Ethscriptions’ could potentially trigger large spikes in ETH Transaction Volumes and Fees.
How could this impact ETH price movements in the coming weeks?
Ethereum Transaction Volume on a Steady Rise
According to on-chain data, the number of transactions carried out on the Ethereum blockchain network has increased marginally over the past week. On June 13, ETH users carried out only 928,540 transactions. Meanwhile, at the close of June 18, that figure rose to 974,650.
This represents a 5% rise in network activity.
If the “Ethscriptions” gain more attention and traction in the coming weeks, ETH transaction volumes will likely rise further.
One of the major features of Ordinal inscriptions is how they drastically increase transaction volumes. From Bitcoin (BRC-20) to Dogecoin (DRC-20) and Litecoin (LTC-20), ordinals have been consistently criticized for causing network congestion and fee spikes.
Now, considering that post-Merge Ethereum currently has a Fee-burn mechanism that reduces net issuance by more than 99%, this could inadvertently positively impact ETH price.
With a base fee and net-negative issuance, a drastic spike in ETH Transaction Volumes will effectively see more ETH coins burned and taken out of circulation. The reduction in ETH circulation supply could send bullish signals to strategic investors.
Altcoin Investors Are Mounting a Buy-Wall
Over the past two weeks, Crypto exchanges delisted several high market cap altcoins as the US Securities and Exchange Commission classified them as securities. Many holders of these altcoins are now allocating their capital toward Ethereum and Bitcoin.
However, those looking to invest in ETH want to enter at a favorable price. The aggregate order books of exchanges show that investors have placed orders to purchase 111,030 ETH coins below the $1,600 mark. Meanwhile, ETH traders have only put up 85,200 tokens for sale around that price range.
When investor demand for an asset exceeds the sell orders on exchanges, buyers begin to compete by increasing their offers. This ultimately puts upward pressure on price.
As identified above, there is a supply shortage of 25,830 ETH across crypto exchanges. And considering the increased network traction and media headlines that the Ethscriptions could attract, ETH demand could rise even further,
In conclusion, each of these critical factors could see ETH price witness positive price movement in the coming weeks.
ETH Price Prediction: Another Push Toward $1,900
Considering the factors above, Ethereum’s price will likely rise to $1,900. However, for the bulls to be confident of a positive price movement, ETH must clear the initial resistance at $1,800.
According to IntoTheBlock’s Global In/Out of The Money Around Price (GIOM) data, 9.48 million investors that bought 6.44 million ETH at the average price of $1,857 could trigger a pullback.
But if ETH scales that resistance zone, it could make its way toward the $1,900 price target.
On the other hand, the bears could trigger a negative Ethereum price movement if it unexpectedly drops below the critical $1,700 support zone. Although, the 3.04 million investors that purchased 4.28 million ETH at the maximum price of $1,701 will likely prevent the drop.
However, if that support level caves, ETH’s price could still retrace toward $1,530.
More From BeInCrypto:
Disclaimer
In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
