The Ethereum Mainnet is scheduled to undergo the Deneb-Cancun or [Dencun upgrade](https://www.banklesstimes.com/news/2024/01/17/ethereums-dencun-hard-fork-fails-to-finalize/) today, March 13.Its purpose is to improve user experience and reduce transaction fees for some users on Ethereum L2 blockchains.Ether (ETH), the native coin of the Ethereum Mainnet, was changing hands for $4,063 at the time of writing.Here are the details about the upgrade and other factors, as well as our ETH price prediction following Dencun.What is Dencun? The Dencun update prioritizes efficiency, scalability, and security by implementing various Ethereum Improvement Proposals (EIPs).The most profound change, according to the Ethereum Foundation, is EIP-4844, which aims to increase the Mainnet’s capacity to [handle bigger transaction volumes via secondary blockchains and optimize gas fees](https://www.investopedia.com/what-you-need-to-know-ahead-of-ethereum-dencun-update-wednesday-8607518) for those same blockchains.ETH price prediction following processing delays Cryptocurrency exchanges may experience delays in processing Ethereum transactions today as Dencun happens.This is bound to impact the ETH price prediction.
L2 blockchains, such as rollups, compress transactions to scale their volumes by processing them in bundles.Those transactions are initially verified off-chain, but the Ethereum Mainnet ultimately settles them.Despite the compression, the nodes processing the transactions store L2 information forever, leading to higher hardware requirements.This increases gas and transaction fees paid by end users.
Excessive data storage accounts for [over 90% of the fees](https://www.banklesstimes.com/news/2021/11/22/eth-adopters-lament-about-its-rising-gas-fees-and-other-key-events-in-crypto/) users of rollups pay.The Dencun upgrade aims to change that, letting temporary “blobs” add data related to L2 blockchains to the Ethereum Mainnet.These “blobs” are stored more efficiently.As of publication time, blob data will be available for almost three weeks.
This is intended to lower costs, which will impact the ETH price prediction.Dencun targets gas cost reduction of 94% Each byte of data stored by L2s on the Ethereum Mainnet costs around 16 gas.When blobs are introduced, the fee will drop to 1 gas per byte, according to a report by Fidelity Digital Assets.This corresponds to a highly impressive 94% reduction in gas costs.However, Ethereum Mainnet users will not enjoy the advantages of lower L2 fees after the upgrade.More competitive and accessible Low throughout, slow transactions, and high fees hinder Ethereum’s performance currently.This affects the ETH price prediction.[Ethereum is much more expensive than blockchains like Solana](https://www.nerdwallet.com/article/investing/solana-vs-ethereum) with average transaction fees of $2.3 as of February.
According to Grayscale, this threatens to drive end users away to other blockchains.
The Dencun upgrade aims to improve transaction speeds and make Ethereum more scalable, competitive, and accessible.ETH price prediction: Transition of the Mainnet Fidelity Digital Assets points out that Dencun could help the Ethereum Mainnet transition from a general-purpose blockchain to a global L2 blockchain database.Dencun’s success can be measured using active addresses to track the number of Layer 2 users.ETH price prediction after the Bitcoin halving Multiple industry insiders [quoted by Cointelegraph](https://cointelegraph.com/news/bitcoin-halving-ether-eth-price) claim that the Bitcoin halving is likely to positively affect Ethereum.Bitcoin supply will become more limited, and Ether supply even more so, leading to a bullish ETH price prediction.
While Bitcoin’s supply continues to grow, albeit at a lower speed, the supply of Ether is dropping.From that point of view, Ether is a better store of value.It stands to gain more from the Bitcoin halving than Bitcoin does.The halving mechanism mirrors precious metals’ scarcity and deflationary aspects.This will have an interesting indirect effect on the ETH price prediction and the broader market.Fewer new coins are entering the market, which will result in a shortage.
If [Bitcoin’s price increases even more](https://www.banklesstimes.com/news/2024/03/11/bitcoin-price-breaks-dollar71k-huge-week-ahead/) after the halving, the price of Ethereum will also increase as investors move to diversify their portfolios.Disadvantages of Ether’s rapid price growth Ether’s rapid price appreciation won’t be without its downsides.A bullish ETH price prediction is not entirely beneficial because ether underpins numerous smart contracts and apps, while Bitcoin serves mainly as a payment method or a digital store of value.Market volatility can make use of Ether less attractive for developers and ordinary users.Ethereum developers will have to deal with this issue throughout the next bull cycle.ETH price prediction: Other factors Bitcoin’s parabolic rally continues in anticipation of the upcoming halving, and inflows to Bitcoin ETFs are steady.
Halving and Dencun are not the only catalysts for the bull market, though.The SEC is expected to approve [spot Ethereum ETFs](https://www.banklesstimes.com/news/2024/03/12/ethereum-price-prediction-as-supply-in-exchanges-dries-ahead-of-etf-approval/) in May this year.This factor will impact the ETH price prediction.There are signs that Ether may lose out in the near term.Bitcoin’s leap to a new all-time high has temporarily pulled liquidity from Ether and altcoins.After the potential of an Ethereum ETF draws attention away from Bitcoin, liquidity will back up and consolidate at elevated levels, resulting in a long-term Ether price rally.
High correlation between Ether, other tokens, and Bitcoin Some investors trade Ether and other tokens for Bitcoin instead of fiat currency to reduce foreign exchange risk.Higher Bitcoin prices will have a secondary effect of raising Ether prices and other token prices, ultimately confirming the bullish ETH price prediction..
