Forget High Gas Fee Challenges, Ethereum Remains Bullish: Time To Buy More?
December 26 2023 - 7:00PM
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Despite concerns over network congestion and high gas fees,
Ethereum remains bullish in the long term, according to
borovik.eth–a partner at Rollbit, who posted on X on December
26. The key factors driving the positive outlook are pointing to
Ethereum’s developer ecosystem, its role in the broader blockchain
ecosystem, and the launch of numerous Layer-2 solutions
(L2s). Will Layer-2 Activity Drive ETH To New Highs?
Borovik.eth remained deviant and optimistic about ETH, even with
Solana (OSL) and other layer-1 coins like Cardano (ADA) soaring in
2023. In the analyst’s view, Ethereum’s scaling challenges are
manageable, believing that developers will find ways of “resolving
this concern permanently over the long term.” Related Reading:
Worldcoin Shows Bullish Breakout, Analyst Predicts 80% Rally Based
on this optimism, the Rollbit partner believes that ETH will likely
recover strongly in the coming sessions considering the level of
development, especially of layer-2 scaling options meant for the
pioneer smart contract platform. According to Borovik.eth, the
development of layer-2 off-chain options backed by massive
companies, for instance, Coinbase, a crypto exchange, and venture
capitalists (VCs), positions Ethereum (ETH) favorably for a bull
run. As of December 26, ETH remains in an uptrend but is cooling
off after solid gains in Q4 2023. At spot rates, ETH is
underperforming most layer-1 platforms like Injective Protocol
(INJ) and Solana (SOL), whose prices rallied, reaching new 2023
highs. ETH prices are still trending below $2,400, a critical
resistance level. If bulls overcome this line, ETH may fly towards
$3,500 or better in the months ahead. The spike in SOL’s valuation,
especially in H2 2023, has led to a comparison with ETH. Even so,
most traders are optimistic. Arthur Hayes recently stated that
users should begin rotating funds from SOL to ETH, an endorsement
of the second most valuable coin by market cap. Ethereum Layer-2s
Manage Over $18.8 Billion While Ethereum faces challenges around
on-chain scaling, developers have been working hard to resolve this
issue. The release of layer-2 off-chain options using rollups has
been key in this drive. Most of these solutions, including Arbitrum
and Optimism, have been critical in alleviating pressure from the
mainnet, thus reducing gas fees. According to L2Beat, layer-2
protocols manage over $18 billion as total value locked (TVL).
There are also 34 active projects, with 23 more being developed.
Among the big companies hitching the layer-2 ride is Coinbase,
where through Base, users can transact cheaply while relying on the
Ethereum mainnet for security. According to Borovik.eth, over 60%
of Base’s revenue is from rollup fees charged, highlighting the
importance of their scaling solution and the role Ethereum plays in
all this. Related Reading: Shiba Inu Whale Moves $45 Million
In SHIB, Bullish? The upcoming Dencun Upgrade set for integration
next year will further slash layer-2 fees. Developers plan to
release this update in the Goerli test network as early as
mid-January 2024. Feature image from Canva, chart from TradingView
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