Ethereum’s Pectra Upgrade Sparks Activity Surge; Price May Approach $2,000 Amid Supply Crunch

• Ethereum’s Pectra upgrade has triggered a surge in network activity, lowering the circulating supply to an 18-day low of 120.69 million ETH.

• A spike in active addresses and increased ETH burning due to higher user demand contribute to the reduced circulating supply and price upward pressure.

• Depending on continued market dynamics and network engagement, Ethereum’s price could hit $2,000 or retreat to $1,744.

Ethereum’s Pectra upgrade has led to a notable reduction in circulating supply, impacting ETH’s price dynamics and driving user activity on the network.

Ethereum Supply Hits 18-Day Low

According to Ultrasoundmoney, ETH’s circulating supply has dropped since Ethereum’s Pectra Upgrade was implemented on Wednesday. As of this writing, it stands at an 18-day low of 120.69 million ETH.

ETH Circulating Supply. Source: Ultrasoundmoney

This long-awaited network overhaul, which raises validator limits to 2048 ETH, enables smart wallets and boosts network efficiency, has fueled a spike in network activity, tightening ETH’s supply as user demand climbs.

Glassnode data shows Ethereum’s active address count has climbed to a 30-day high, signaling renewed user engagement. According to the data provider, on May 7, the number of unique addresses active in the network, either as a sender or receiver, totaled 474,044.

ETH Number of Active Addresses. Source: Glassnode

When Ethereum’s active address count increases, more unique wallets interact with the network. The surge in user activity signals growing demand and network usage, and it often correlates with higher gas fees and increased ETH burning.

This is because with more users on the network, more transactions flow through the network, triggering higher gas fees and accelerating the ETH burn rate. According to Etherscan, ETH’s burn rate is at its highest level since May began.

Daily Ether Burnt. Source: Etherscan

As more ETH coins are burned, the circulating supply lessens, increasing the upward pressure on the altcoin’s price.

Will It Reclaim $2,000 or Retreat to $1,744?

On the daily chart, ETH trades above the horizontal channel, which kept its price within a range between April 23 and May 7. The altcoin faced resistance at $1,872 during that period and found support at $1,744.

If the breakout continues, ETH could reclaim the psychological $2,000 price zone and continue its rally toward $2,235.

ETH Price Analysis. Source: TradingView

However, a failed retest of this breakout could cause ETH’s price to fall to $1,744. If it fails to hold, the price could drop to $1,564.

Conclusion

The Pectra upgrade has positioned Ethereum for renewed momentum, but impending price movements hinge on market dynamics and user participation. As the network continues to evolve, interest from traders and investors will be crucial. Maintaining engagement could either propel ETH toward new highs or lead to potential declines. Monitoring ETH’s supply and activity trends will be essential for understanding future price movements.