Fidelity Digital Assets released a “Q2 2023 Signals Report” on July 18, which claimed that Ether’s outlook for the next 12 months and the long term is positive. Year-to-date, Ether (ETH) has gained 62%, but while the investment firm might be short-term bullish on Ether, that does not mean it believes that the month-long bullish channel will be sustained.
While institutional investors like Fidelity Digital Assets may have a bullish longer-term vision for ETH’s price, let’s compare their analysis against network and market data to see if they’re on the money.
Beyond the technical indicators, the rationale behind Fidelity’s bullish outlook for Ether is the network’s higher burn rate versus coin issuance, the “new address momentum” and a growth in the number of network validators.
According to the Fidelity report, the net issuance since the Merge in September 2022 resulted in a net supply decrease of more than 700,000 Ether. Additionally, the analysts claim that Glassnode data showing an increasing number of Ethereum addresses that transacted for the first time ever proves healthy network adoption.
The report also points to a 15% increase in the number of active Ethereum validators in the second quarter.
The expectation around EIP-1153 is also building momentum for the Ethereum network, as the “transient storage opcode” improves smart contract efficiency, reduces costs and amplifies the Ethereum Virtual Machine design. The change is especially meaningful for decentralized exchanges (DEXs), where Ethereum’s dominance declined to 46% from 60% six months prior, according to DefiLlama data.
Dencun upgrade expected to reduce transaction costs
Another potentially bullish factor for the Ethereum network is
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Author: Marcel Pechman
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