ETH’s next trend could be determined by a move outside the $3,250 and $3,550 range.
Ethereum (ETH) is down 1% on Tuesday following a weeklong consolidation of the general crypto market. The top altcoin could be set for a bullish 2025 if blobs continue their recent trend of burning high amounts of ETH.
Ethereum burn leaderboard reveals that blob fees have burnt over 500 ETH in the past week — the highest, above Uniswap and ETH transfers. This emerging trend is somewhat opposite to the path ETH followed for most of 2024.
The introduction of blobspace on Ethereum blocks via the Dencun upgrade in March significantly scaled Layer 2s and reduced their transaction fees. However, the fee reduction offset the burn mechanism, which was responsible for keeping ETH deflationary, with its supply rising by over 400K ETH between April and December.
The ETH burn mechanism was introduced in the London hardfork in August 2021 to keep ETH’s supply from growing by permanently removing a portion of transaction fees from circulation.
However, with Layer 2 networks seeing increased volumes recently, the average blob count per block has often exceeded the target of 3.0, causing them to enter price discovery. As a result, L2s pay transaction fees for the extra usage, increasing the amount of ETH burnt daily.
If Ethereum network activity heats up as the holidays near its end and blobs maintain their ETH burn trend, it could lead to a quick flip of the negative sentiment surrounding blobs and, by extension, ETH. Such a change could reinforce the ETH “ultrasound money” narrative and boost its appeal to investors.
Meanwhile, Ethereum exchange-traded funds (ETFs) ended their four-day inflow streak after recording net outflows of $55.4 million on Monday, per Coinglass data.
Ethereum sustained over $31.19 million in liquidations in the past 24 hours, per Coinglass data. The total amount of liquidated long positions accounted for $19.37 million, while short liquidations were worth $11.82 million.
Ethereum has been range-bound in the past 12 days, moving within the $3,250 and $3,550 price range. The consolidation, which mirrors the general crypto market activity, could largely be due to the absence of trading volume, as most traders are on vacation following the Christmas and New Year holidays.
If ETH tilts downward and moves below $3,250 as traders return on January 2, it could bounce off the $3,000 psychological level. Such a move will complete the maximum profit target of a double top pattern, the top altcoin posted on December 6 and 16. A failure to find support at $3,000 could spark heavy selling pressure on ETH.
If ETH tilts upward and sustains a high volume move above the $3,550 level, it could retest the $4,093 major resistance. This resistance is a major level to monitor as 2025 unfolds. A high volume move above $4,093 could see ETH tackle its all-time high resistance of $4,868.
The Relative Strength Index (RSI) and Stochastic Oscillator (Stoch) momentum indicators are below their neutral levels, indicating dominant bearish momentum. A cross above their neutral levels will indicate a potential resumption in ETH’s uptrend.
A daily candlestick close below the $2,817 key support level will invalidate the thesis and could send ETH toward the $2,200 region.
