Ethereum between growth and inflationary effects

The price of Ethereum (ETHUSD) closed yesterday’s trading below the $3,132.80 level, reflecting the failure to confirm a breach of this important resistance. Ethereum remains trapped between the resistance level at $3,132.80 and the support level at $2,905.30. If the support level is broken, Ethereum is expected to suffer new losses in the short term. On the positive side, if the price can break through the resistance level, Ethereum is expected to recover and achieve positive targets. The outlook for today is neutral, with the possibility of testing the support at $2905.30 if negative pressures continue. The future move depends on the price crossing any of these pivot levels

Expectations for today: Expected trading range: between support $2950.00 and resistance $3200.00

Price expectations: Neutral so far, with the possibility of testing the $2905.30 support if negative pressures continue. The Ethereum (ETHUSD) price analysis may remain neutral for the time being, with expectations varying between a downward trend and an upward trend based on the current support and resistance levels. The future price movement depends largely on whether it crosses any of these pivotal levels.

Ethereum network inflation is waning after the DenCon update, with data showing a significant increase in Ethereum supply since mid-April. Despite its benefits of reducing transaction fees, the impact of the March DenCon update on Ethereum’s inflationary state is a major selling point for long-term investors. Over 112,000 ETH have been added to the total supply and despite initial hopes, Ethereum is now in its longest inflationary period since moving from Proof of Work (PoW) to Proof of Stake (PoS).

The importance of scaling activity for developing blockchain applications

This expansion activity is crucial for the development of new blockchain applications, strengthening the position of Layer 2 and Layer 3 solutions. These solutions enable transactions to be executed more quickly and at lower costs, which increases the efficiency of the network and contributes to attracting more developers and users to Ethereum.

Layer 2 and Layer 3 Solutions: Layer 2 solutions, such as Optimistic Rollups and ZK-Rollups, play a big role in improving the performance of the Ethereum network by reducing the load on the core network. While Layer 3 solutions contribute to improving security and privacy and provide additional functionality that can be easily integrated with Layer 2 solutions. Thanks to these improvements in gas costs and increased activity on Layer 2 networks, Ethereum continues to strengthen its position as a leading platform for developing new blockchain applications. This expansion activity not only contributes to improving network performance but also opens new horizons for developing innovative technologies that can revolutionize many industries.

The recent inflationary trend in Ethereum and its impact on the Layer 2 system and the impact of inflation on network fees: The recent increase in the inflation rate on the Ethereum network, which added more than 112,000 ETH to the total supply, is significantly impacting the Layer 2 system. This rising inflation could lead to higher gas fees on the mainnet, prompting users to shift toward layer 2 solutions that offer lower fees and faster transactions.

Reevaluating security models: Layer 2 networks face security and sustainability challenges as a result of fluctuations in the value of Ethereum. These networks may require re-evaluation of their security models to ensure system robustness and decentralization. Maintaining these balances can be complex but is essential to maintaining the trust of users and developers.

Promoting innovation in the second layer

The current environment is likely to stimulate innovation in Layer 2 solutions, enhancing efficiency and user experience. As adoption of these solutions increases, we may see the development of new technologies that boost performance and reduce costs, attracting more developers and users to the Ethereum platform. Analysts also explained that fluctuations in Ethereum values ​​may lead to a re-evaluation of the security models of second-layer networks to ensure strength and decentralization. This environment can stimulate innovation at Layer 2, enhancing efficiency and user experience, and attracting more developers.”

The increase in inflation on the Ethereum network significantly affects mainnet fees and pushes users towards more efficient Layer 2 solutions. These networks face security and sustainability challenges, requiring constant re-evaluation of their security models. Ultimately, this challenge can stimulate innovation and enhance Ethereum’s ability to deliver advanced and reliable blockchain solutions.

Ethereum Staking Peak and Forecast for ETFs and Ethereum Staking: Ethereum Staking has recently reached record levels, reflecting growing confidence in this digital asset and continued investor interest in it. This coincides with expectations of increased demand for Ethereum due to expected movements in exchange-traded funds (ETFs).

Ethereum ETFs: ETF analysts expect Ethereum spot ETFs to begin trading by July 2. These expectations come after positive comments from the US Securities and Exchange Commission (SEC) on S-1 filings. These comments indicate the Authority’s readiness to approve these funds, which enhances confidence that they can be launched soon.

Introducing VanEck: Companies recently filed a Form 8-A for an Ethereum spot ETF, reinforcing the sentiment that it could launch soon. This optimism reflects the speedy approval process seen with spot bitcoin ETFs launched in January. The launch of Ethereum ETFs could increase demand for Ethereum, boosting its market value and giving a major boost to institutional adoption of the digital asset.