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Ethereum Struggles Post-Dencun Upgrade: Will it Hit $5K?

Following the highly anticipated Ethereum Dencun upgrade’s deployment on March 13, the cryptocurrency’s price has failed to sustain its upward trajectory, prompting speculation about a potential decline towards the $5,000 mark. Despite initial bullish sentiments surrounding the upgrade, Ethereum has encountered resistance in maintaining its momentum.

Initially, the announcement of a successful Sepoli test run for the Dencun upgrade on January 30 ignited optimism among Ethereum traders, leading to a remarkable 70% surge in price over the subsequent 40 trading days, culminating in a peak of $4,092 on March 12. However, as the upgrade went live on the mainnet, Ethereum experienced a divergence from the broader crypto market trend, with traders engaging in significant selling activity.

CryptoQuant’s taker buy/sell ratio, a metric used to gauge trading activity on crypto exchanges, revealed a negative trend as Ethereum prices exceeded $4,000 in early March, hitting a 40-day low of 0.93% on March 14, indicating a predominance of selling pressure in ETH perpetual swaps markets.

Further evidence of the sell-the-news phenomenon emerged as investors flooded the markets with an additional 74,000 ETH, highlighting a growing interest in short-term trading opportunities. This influx of coins into exchange wallets, amounting to approximately $290 million, is likely to increase market supply, potentially driving prices below $3,900 in the coming days if demand fails to match this increased supply.

In light of these market dynamics, it appears unlikely that the Dencun upgrade alone will propel Ethereum’s price to $5,000 in the near term, as previously anticipated by bullish traders. Instead, Ethereum is expected to face further downward pressure, potentially slipping below the $3,900 mark as traders continue to capitalize on the post-upgrade selling spree.

Key support levels to watch include the $3,840 territory, where a significant number of addresses have bought Ethereum, and $3,830, which, if breached, could trigger margin calls and stop-loss orders. On the upside, sustained support above $4,050 is essential for the bulls to regain control of short-term market momentum.

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