Ethereum (ETH) Price Dips Below $1600, Whales Dump 143k ETH Ahead of Dencun Upgrade

Ethereum (ETH) price traded below $1,600 on Thursday, dipping 1% during the early Asian session, as whale-driven sell pressure mounted and on-chain metrics signaled a retest of critical support levels.

* Ethereum (ETH) price dropped below $1,600 on Thursday, sliding 1% during the early Asian session, as whale-driven sell pressure increased and on-chain metrics signaled a retest of critical support levels.

* A group of Ethereum whales had sold over 143,000 ETH in the past seven days, said Ali Martinez from IntoTheBlock. This coincided with rising concerns over ETH’s value accrual model and its inability to capture fees after the March 2024 Dencun upgrade.

* " $1,528.50 is a key support level," said Martinez, adding that over 2.61 million addresses had formed an 'inferno' holding around 4.82 million ETH at that price. A break below this zone could trigger further downside volatility.

* But some Ethereum developers have proposed increasing blob fees to support L1 earnings. However, Binance analysts warned that Layer-2 networks could migrate to cheaper alternatives like Celestia or EigenLayer if minimum blob costs rise.

* "L2s are rational businesses," they stated, suggesting a price-sensitive dynamic that could fragment the Ethereum ecosystem further.

Rising L2s Put Spotlight on ETH’s Economic Model

Scalability improved 15.95x with Ethereum’s recent Dencun upgrade, which also accelerated data availability across Layer-2 chains.

But the upgrade slashed Layer-1 (L1) fee accrual by a large margin, weakening ETH’s utility as a revenue-generating asset, said Binance Research.

L2s now settle for a fraction of what they previously paid on L1. This finding is crucial as it impacts the sustainability of L2s in the long term.

With L2s quickly gaining traction for their low transaction costs and efficient throughput, the narrative of ETH as ‘ultrasound money’—based on burned gas fees—has lost some ground to faster-growing blockchains like Solana and BNB Chain.

Some Ethereum developers have proposed increasing blob fees to support L1 earnings. However, Binance analysts noted that L2 networks could migrate to cheaper alternatives like Celestia or EigenLayer if minimum blob costs rise.

“L2s are rational businesses,” they stated, suggesting a price-sensitive dynamic that could fragment the Ethereum ecosystem further.

ETH Price Approaches Historic Buy Zone As Sentiment Weakens

Market participants are closely monitoring as ETH approaches its realized price—a level that has historically been linked with macro bottoms.

Analyst Abramchart highlighted that each major Ethereum bull cycle has begun near or below the lower Bollinger Band, toward which ETH is now heading.

"If the trend continues downward, it could signal deep-value accumulation," abramchart stated. However, they noted that a clean break below the band could indicate further weakness in the market.

As ETH trades closer to or below this metric, sentiment typically turns neutral or bearish, setting the stage for potential recovery or capitulation.

ETH Price Caution Urged Amid ‘Buy The Dip’ Fatigue

Short-term traders are still in a difficult position, with several popular X accounts, such as IncomeSharks, detailing personal losses from mistimed entries.

"A good example of why taking some profits is important and why you can't keep buying every single dip," they wrote.

The comment highlights broader market fatigue after multiple attempts to bounce failed, leaving traders skeptical of any sustained recovery, especially as bulls struggle to maintain momentum.

Volume has quickly dried up on most exchanges, and speculative buying activity has largely cooled. But historical data favors patient accumulation during these drawdowns—provided prices manage to hold above key zones.

Any decisive break below $1,528.50 could alter the trend structure significantly, as it's a level that has been crucial in past cycles due to the massive inferno of addresses formed around that price.

ETH Still Outpaces Competitors In Network Security

Despite the challenges, Ethereum still outpaces competitors in network security, having maintained over 1 million validators, in stark contrast to Celestia (100) and EigenDA (170). But the debate around value accrual remains largely unresolved.

Binance Research highlighted "based rollups" like Taiko, which contributed more L1 fees to Ethereum than the top three L2s combined over the past year. However, upcoming upgrades—Pectra and Fusaka—do not prioritize this model, which may delay a complete solution.

Ethereum’s next major protocol change is due on May 7, with another one scheduled for Q4. Whether these updates will sufficiently address the current economic concerns remains to be seen.

Overall, Ethereum’s price action, on-chain behavior, and structural limitations converge at a pivotal moment. While historical indicators suggest a potential long-term bottom, whale exits and the difficulties in capturing fees paint a more cautious picture.

The coming weeks will be crucial in determining whether $1,52