Despite positive network activity, Ethereum remains at risk of a price correction in the short term

Activity and supply dynamics on the Ethereum network have remained positive since the Dencun hard fork went live, CryptoPotato reported. CryptoQuant’s latest weekly report says that despite positive network activity, Ethereum (ETH) remains at risk of a price correction in the short term. The Dencun upgrade aims to significantly reduce transaction fees on the Ethereum-based second layer network through a mechanism called proto-danksharding. Since the successful launch of Dencun, the total ETH supply has continued to decline, reaching its lowest level since August 2022. Total ETH supply currently stands at 120.09 million, falling at a seven-day average of -5,000 ETH, the fastest daily pace since May 2023. The burning of Ethereum transaction fees caused the total supply to decrease. The total ETH supply dropped significantly as transaction fees in excess of base network fees were sent to an inactive address. High activity on the Ethereum network has led to a spike in transaction fees. Additionally, while these on-chain indicators are positive for Ethereum, ETH remains at risk of a price correction. Analysts say the asset is now at its most expensive levels since December 2021, pointing to the risk of a price pullback. Additionally, Ethereum has an MVRV ratio of 2.0, indicating that the asset is worth 2x its average on-chain purchase price, leaving ETH holders with a 50% unrealized profit. Notably, Ethereum’s MVRV ratio was last seen on November 30, 2021, when the asset was valued at $4,693. Meanwhile, ETH is down more than 6% over the working weekend, trading below $3,700 as of writing.