🗓 Save the Date: 8 February 2024
Ethereum developers are preparing to set the mainnet launch date for the Dencun update. This update brings significant improvements, including proto-danksharding, which promises to revolutionize scalability and transaction costs on Layer-2.

🧪 Successful Testing!
According to Ethereum core developer Tim Beiko, the recent update testing “went very well”. At the All Developer Execution Call (ACDE) 180 meeting, it highlighted the success of the Sepolia fork on 30 January and the upcoming Holesky testnet update on 7 February.

🔍 What does the Dencun Update bring?
This update introduces significant changes to Ethereum’s consensus and execution layers. Details can be found in the Ethereum Foundation’s blog post of 24 January.

📈 Building on Shapella’s Success
After last year’s Shapella update, which unlocked Ether and attracted institutional investors, Ethereum is gearing up for another crucial update.

📅 What’s Next?
If all goes well, the timing of the update for the core network will be decided at the next ACDC (All Core Developers Call), scheduled for the end of next week.

🤞 What are the Chances?
Christine Kim at Galaxy Digital estimates an 80% chance that Dencun will be live on the main network by the end of March, with a 40% chance that it could launch by the end of February.

🚀 Proto-dank Sharding in Action!
The Dencun network update went live on the Goerli testnet on January 17, introducing several Ethereum Improvement Proposals (EIPs), including EIP-4844, which enables proto-dank sharding. This will significantly reduce transaction costs on layer-2.

💡 What does Proto-dank Sharding mean?
The purpose of proto-dank sharding is to reduce the cost of rollups by introducing a new data container called “blobs”, making data availability cheaper.

💸 Ethereum price before Dencun
Ethereum (ETH) managed to hold above the $2,300 level on Feb. 6, while Bitcoin (BTC) and the rest of the crypto market are facing a $37 billion drop. Key on-chain data shows that rising ETH 2.0 deposits ahead of the upcoming Dencun update contributed to the positive start to February, despite pessimistic trends in the crypto markets.

Ethereum’s price outperformed the market in February, posting significant gains in the first 5 days of February 2024, while Bitcoin and the rest of the crypto market struggled. Between January 31 and February 6, the price of ETH rose from $2,241 to $2,326, while the total crypto market capitalization shrank by 2%, losing $37 billion during that period.

This demonstrates that the Ethereum price is currently outperforming the overall market trend. Ethereum’s resilience amid the market decline suggests that there are several underlying factors that contributed to this performance.

ETH ETF rumors continue to circulate, but the recent growth in coin deposits on the ETH 2.0 chain appears to be the dominant factor supporting Ethereum’s relative strength in Feb 2024 to date.

Deposits for staking exceeded $300 million before the Dencun update. Ethereum 2.0 staking has become a key factor in the Ethereum ecosystem since the Shappella update in April 2023. Recently, Vitalik Buterin proposed a number of network improvements, including an increase in gas limits. Also, the long-awaited Dencun update, also known as Cancun-Deneb, which is expected to be completed on February 7, is largely focused on increasing scalability. These positive network developments seem to have strengthened stakeholder confidence in recent weeks.

Cryptoquant’s staking entry metrics track the number of coins deposited daily into ETH 2.0 chain contracts. The chart shows that on 31 January there were 143,103 ETH (~$329 million) entries for staking and on 2 February there were 137,472 ETH, the highest entries since 3 December 2023. Deposits for staking are crucial to the security and functionality of any PoS network. However, when there is significant growth in staking deposits during a market downturn, as noted above, this suggests that investors in the crypto ecosystem in question have a positive long-term outlook. Therefore, instead of joining market sell-offs, Ethereum holders tend to deposit for staking to weather the market correction by earning passive income.

Staking deposits reduce selling pressure because they reduce the number of coins available for trading on exchanges. This explains in part how the ETH price has managed to outperform the market in February 2024 so far.

The timing also suggests that stakeholders are confident in a positive outcome of the upcoming Dencun upgrade.

In summary, rising staking deposits and positive sentiment about future network upgrades have supported ETH’s price action in recent weeks. With these factors still in play, Ethereum could once again try to hit the $2,500 price target in the coming days. However, the bulls face significant near-term resistance at the $2,350 area. Global inflow/outflow data from IntoTheBlock shows that 1.34 million current holders purchased 4.68 million ETH at an average price of $2,358. Given that they have been losing for almost a month, they may be tempted to exit when the price approaches their break-even point. However, if the bulls manage to overcome that resistance, it could open the door for a retest of the $2,500 level as predicted.

On the other hand, the bears could negate this bullish forecast by forcing a reversal below the $2,000 area. However, as shown above, the bulls could form strong support at the $2,040 level.

Stay tuned for more updates on Ethereum’s journey towards improved scalability and lower transaction costs with the Dencun upgrade! 🌟 #Ethereum #DencunUpgrade #CryptoNews