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24 February 2024
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Ethereum Market Update: ETH/USD mar retreat to $240 before another bullish wave

  • Ethereum transaction fees are growing due to DeFi popularity.
  • ETH/USD may retreat to $240.00 as bulls hit the pause button.

Ethereum transaction fees are growing due to the sudden surge in demand for decentralized finance apps (DeFi). According to the “State of the Network” report published by the cryptocurrency data provider Coin Metrics, average ETH transaction fees are close to $0.4, which is the highest level since the middle of 2018.

The experts point to the growing demand for block space from the booming DeFi market, which leads to increased fees and, consequently, creates more revenue and incentivizes miners.

Currently, over $3 billion is locked in various DeFi protocols, most of them are based on Ethereum blockchain. The industry is growing with the lightening speed as just over two weeks ago the total locked value across DeFi protocols amounted to $2 billion.

Ethereum’s creator Vitalik Buterin is concerned about the growing fees as they make the network less secure. He cited Princeton’s paper that explained the potential risks related to high transaction fees.

Also, the growing fees may signal that the network is not scalable enough to handle lots of activity, Coin Metrics added. 

ETH/USD: Technical picture

At the time of writing, ETH/USD is changing hands at $244.30. The coin has barely changed both on a day-to-day basis and since the beginning of the day after a sharp increase on Wednesday. ETH/USD broke above the short-term resistance created by $240.00; however, the further upside is limited by the 200-week SMA at $262.32.  A sustainable move above this area is needed for the upside to gain traction. with the next focus on $287 (the previous recovery high) and $300.00.

ETH/USD weekly chart

On the downside, a sell-off below $236.00 (channel support created by 50-day SMA and the middle line of the daily Bollinger Band) will negate the bullish scenario and bring bears back to the market. The next support is created by the upward-looking 100-day SMA at $218.50. Once it is out of the way, the sell-off is likely to gain traction with the next focus on psychological $200.00.

ETH/USD daily chart

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