Ethereum (ETH) finds itself in a consolidation state ever since it breached the $2,000 mark a while back.
The second-largest cryptocurrency based on market capitalization is hovering around the $1,643 price at the time of writing, according to CoinMarketCap.
Market trader and analyst Michael van de Poppe has noted that ETH’s sideways consolidation will continue until a bottoming construction comes up. He explained:
“Ethereum is still fine here, despite the further dropdowns. Sideways consolidation, while a bottoming construction should be close.”
Ethereum’s high gas fees challenge
ETH has been grappling with the challenge of high gas fees. As a result, its price has been nosediving, given that some users are seeking cheaper alternatives.
EIP-1559, an Ethereum Improvement Protocol set to launch in July, has been touted as a game-changer that will address the issue of rising gas fees on the network.
Nevertheless, an “Ethereum Gas Report” by CoinMetrics data analytics shows that Ethereum’s EIP 1559 upgrade may not resolve this issue as the best bet is on Ethereum 2.0, which seeks to offer a transition to a proof-of-stake consensus mechanism from the current proof-of-work.
Investors are betting big on Ethereum 2.0 ever since it went live in December 2020 because the amount of ETH staked continues to grow by the day. As recently outlined by on-chain data analytics provider Glassnode, the “total value in the ETH 2.0 Deposit Contract recently reached an ATH of 3,559,106 ETH.”
Ethereum is currently undervalued
According to technical and on-chain analyst Ali Martinez, the MVRV ratio is around -3.93%, showing Ethereum is currently undervalued. He acknowledged:
“The MVRV, which measures the average profit/loss of addresses that acquired Ethereum in the past month, also favors the bulls. Each time the MVRV moves below 0%, a bullish impulse tends to follow. The MVRV ratio is now hovering at -3.93%, indicating ETH is currently undervalued.”
Time will tell whether ETH 2.0 will be a game-changer in eradicating the high gas fees problem currently experienced on the Ethereum network.
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