Ethereum’s native token, Ether (ETH-USD), has surged past $4,000 for the first time in eight months, signaling a remarkable comeback after months of muted performance. Ether has climbed 10.7% in the past week, breaking through its 200-day exponential moving average—a key indicator of long-term momentum. Analysts note its relative strength index is nearing overbought territory at 71, suggesting strong market enthusiasm.
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Trump’s Election Spurs Market Sentiment
The rally gained traction on November 6, coinciding with Donald Trump’s surprise electoral victory. Analysts speculate the event injected optimism into risk-on assets like Ethereum, as traders anticipate a favorable regulatory environment under his administration. This optimism aligns with ongoing record inflows into Ethereum-focused exchange-traded funds, further supporting its price rise.
Layer-2 Networks Challenge Ethereum’s Revenue Model
However, Ethereum’s growth isn’t without challenges. The Dencun upgrade earlier this year slashed transaction fees for layer-2 networks, causing Ethereum’s base layer revenues to plummet by 99%, according to Token Terminal. Fees are now recovering, with $10.9 million generated on December 5, compared to just $500,000 in August. Some analysts had feared that competition from layer-2 solutions could undermine Ethereum’s viability.
Longtime Ethereum Foundation researcher Justin Drake proposed introducing a layer-1 sequencer to enhance transaction composability between decentralized applications, potentially addressing these revenue concerns.
At the time of writing, Ethereum is sitting at $4,043.18.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
