Ethereum Dencun Upgrade: The Impact on ETH Prices

Even after countless upgrades to the Ethereum blockchain, we’re only 55% of the way done, according to Ethereum co-founder Vitalik Buterin. After successfully executing The Merge in 2022, Ethereum’s post-Merge upgrade schedule is likely to follow its original road map, which begins with the Surge and ends with the Splurge. After the detour that was the Shanghai Upgrade, which allowed Ether stakers to finally withdraw their deposited ETH, we’re seeing Ethereum’s core developers resume their post-Merge road map now that the way forward has been paved.

Known as the “Dencun” Upgrade (a portmanteau of “Deneb” and “Cancun”), the Ethereum blockchain’s upcoming upgrade aims to improve the network’s overall scalability and security. In total, the upgrade comprises five Ethereum Improvement Proposals (EIPs) that will supposedly increase data storage and lower costs. 

Curious as to how the team will set out to accomplish this? From Proto-Danksharding to transient storage opcodes, here’s all you need to know about the Ethereum Dencun Upgrade and how it might impact ETH prices once it’s fully implemented this year.

Key Takeaways:

• Ethereum’s Dencun Upgrade is the next major update to the network that core developers have chosen to work on.

• The Ethereum Dencun Upgrade was previously scheduled for October 2023. However, it was later delayed and is now scheduled for the first quarter of 2024. 

• Learn from this article how you can profit from the Ethereum Dencun Upgrade.

What Is the Ethereum Dencun Upgrade?

Ethereum’s Dencun Upgrade is the next major step forward for the network that core developers have chosen to work on. Labeled the “Surge” portion of the Ethereum Foundation’s road map, Dencun aims to improve the blockchain’s maximum number of transactions per second (TPS) without sacrificing concerns like security and ease of development for Layer 2 decentralized applications (DApps).

It's important to note that the Ethereum Dencun Upgrade isn’t merely a software update, but rather a significant milestone for Ethereum. In a nutshell, Dencun aims to improve the network's scalability and security, and to lower transaction fees — which could attract more users to the network. According to researcher Alex Stokes of the Ethereum Foundation, October 2023 was a feasible goal for Dencun's activation. However, the upgrade was later delayed, a possibility that had been discussed by core developers. The launch for the Ethereum Dencun Upgrade will likely be in the first quarter of 2024, and will include the following EIPs:

• EIP-4844 (Shard Blob Transactions): Shard Blob Transactions scale data availability of Ethereum in a simple, forward-compatible manner.

• EIP-1153 (transient storage): Lowers the cost of on-chain data storage for opcodes, thus optimizing block space.

• EIP-4788 (Beacon block root in the Ethereum virtual machine): Exposes the parent beacon block root in the execution layer to enhance the designs of cross-chain bridges and stake pools.

• EIP-5656 (memory copying instruction): Provides efficient EVM instruction for copying memory areas in order to build data structures more efficiently.

• EIP-6780 (SELFDESTRUCT only in same transaction): Changes the functionality of SELFDESTRUCT, a code that can potentially terminate smart contracts.

If you would like to check the progress of the update, you can do so here.

Proto-Danksharding & Blob Carrying Transactions

As a new transaction format that’s introduced by Danksharding, a binary large object (BLOB) refers to large data packets integrated into Ethereum’s network to boost overall transaction throughput. These “blobs” consist of additional information temporarily stored on the Ethereum consensus layer, which facilitates a more cost-effective and affordable solution for reducing overall gas fees.

Blob-carrying transactions essentially allow a transaction sender to attach a large chunk of data, akin to how large files are attached to emails prior to sending them. This ultimately frees up more space for transaction data on rollup protocols, which will make transactions more affordable in the long run as it reduces the fees for posting data to Ethereum.

What Is the Deneb Upgrade, and How Does It Differ From the Cancun Upgrade?

If you’re just getting started within the Ethereum ecosystem, you may be curious about the term "Cancun" being thrown around by some crypto enthusiasts. Essentially, this is a reference to the upcoming Ethereum network upgrade, which will involve updates to both the execution and consensus layers. The Cancun Upgrade specifically pertains to the update of the Ethereum execution layer, while the Deneb Upgrade focuses on the network’s consensus layer. 

These upgrades will be taking place simultaneously, so there's no need to worry about any potential delays in the execution of either one. It's worth noting that both updates are being implemented to improve the overall efficiency and security of the Ethereum network, which is exciting news for anyone involved in the Ethereum ecosystem. Whether you're a seasoned user or just starting out, this upgrade is definitely something to watch for.

The Deneb Upgrade will be implemented primarily to provide data availability support for the highly awaited EIP-4844, known as Proto-Danksharding. That aside, Deneb will also include the following EIPs:

• EIP-7044 (Perpetually valid signed voluntary exits): Locks voluntary exit domain on Capella for perpetual validity.

• EIP-7045 (Increase max attestation inclusion slot): As indicated, increases max attestation inclusion slot.

Why Is Everyone Talking About the Ethereum Dencun Upgrade?

Like The Merge, the Ethereum Dencun Upgrade represents yet another step in the right direction for the Ethereum Foundation and its core developers as they strive to complete the Surge portion of their road map. The execution of Dencun for the Ethereum blockchain marks the first significant step toward overall project progress, since Proto-Danksharding is a key EIP that must be executed to enhance transaction throughput. 

This has once again sparked interest in the long-term value of investing in Ethereum. It continues to become the most widely adopted smart contract platform to deliver on fulfilling the promises of its road map. With Dencun being imminent, interest is peaking in the potential upcoming volatility to come from the execution of this major network upgrade.

The Ethereum Dencun Upgrade has already gone live on the Goerli and Holesky testnets and the Sepolia testnet faucet, and users are anticipating its mainnet launch.

What Does the Ethereum Dencun Upgrade Aim to Achieve?

From scalability to better security, here are some of the most talked-about improvements to come with the Ethereum Dencun Upgrade.

Enhanced Scalability

The temporary storage and retrieval of off-chain data via Ethereum nodes will resolve the key issue of scalability for the Ethereum blockchain. Proto-Danksharding will significantly increase transaction throughput, which can improve the overall user experience as transactions are processed at a greater rate without fear of congestion or being bogged down by traffic demands. 

Layer 2 Gas Fee Reductions

The introduction of Proto-Danksharding and related EIPs is expected to address the issue of high gas fees on the Ethereum network. By optimizing transaction processing and reducing the burden on network resources, the upgrade may lead to transaction costs as low as a fraction of a cent. This remarkable fee reduction would be particularly beneficial for investors who frequently engage with the Ethereum ecosystem and its related DApps. From GameFi to trading NFTs, this could lead to even greater adoption of the Ethereum network in the future.

Network Security and Stability

The Dencun Upgrade also incorporates various improvements and bug fixes, enhancing the overall security and stability of the Ethereum network. For ETH investors, this will mean a more robust ecosystem with reduced vulnerability to potential attacks or network disruptions. By satisfying a critical area of the blockchain trilemma, crypto enthusiasts and newcomers who invest based on a network’s security and stability may have more confidence in investing in ETH for the long haul.

The Impact of the Ethereum Dencun Upgrade on ETH Prices

Taking into account the Ethereum Foundation’s solid track record of executing network upgrades, the Ethereum Dencun Upgrade sounds like nothing but good news for ETH maximalists and long-term investors. This is because implementing the numerous EIPs will help strengthen Ethereum’s core fundamentals and facilitate mass adoption once interest builds again in crypto during a bull run.

Conversely, this might also be a case of “buy the rumor, sell the news,” whereby ETH traders and speculators may decide to sell off their ETH holdings or short-sell ETH once the Dencun Upgrade is completed. This is intended to take advantage of retail investors and traders buying up ETH on the basis of FOMO (fear of missing out).

Keen to learn how you can profit from the near-term volatility caused by the Ethereum Dencun Upgrade? Read on as we cover our bullish and bearish takes on how ETH prices might move post-Dencun update.

Ways to Profit from the Ethereum Dencun Upgrade

Here are our thoughts on how to trade ETH in the event of pronounced Ether price volatility. All of our outlooks will be based on the ETH chart displayed below, and represent possible scenarios in which ETH prices could fluctuate.

Buy at Support Levels

Understanding how to identify strong support levels for purchasing during dips can significantly enhance your trading success. 

As we analyze the price chart, it's clear that Ethereum has experienced significant volatility with a pattern of peaks and valleys. Notably, there seems to be a consolidation phase above the $2,200 level, which might be interpreted as a support zone. This area could be significant for traders who follow the strategy of buying at lines of support, hypothesizing that the price is more likely to rebound from these levels.

With the Ethereum Dencun Upgrade approaching, market participants may be closely watching the $2,200 level. Upgrades like Dencun often bring heightened attention, and can influence investor sentiment. If the upgrade is expected to have a positive impact on Ethereum's network efficiency and overall value, we might observe its price stabilizing or increasing as the event draws closer.

Ether could potentially hover around this price range, as investors may view the upgrade as a catalyst for future value appreciation. It's common for prices to consolidate before such events as investors take a “wait-and-see” approach. This period of consolidation may represent a form of equilibrium in which the market is balancing optimism about the upgrade's potential benefits against the inherent risks and uncertainties.

Bullish ETH Outlook

FOMO is a powerful driving factor in the crypto space — and this could certainly be the case with the essential Dencun network upgrade. Thanks to FOMO, traders might jump on the ETH bandwagon if the upgrade proceeds without a hitch. To take advantage of this FOMO-induced ETH rally, it might make sense to build a trading plan around a stop market leveraged long order and buy the leveraged Perpetual token pair ETH3L/USDT with us.

Bullish crypto traders utilizing technical analysis would want to see ETH prices retest the bottom of the ascending channel at around $2,200. If ETH can break through this price barrier, we might see its price surge toward the $2,700 to $2,800 range.

Bearish ETH Outlook

While the long-term prospects of the upcoming Ethereum Dencun Upgrade might sound bullish on a fundamental level, there are still a host of other factors that could cause ETH prices to decline in the short term. Some of these negative catalysts include:

• Dencun Upgrade plans being delayed once again, due to a crucial roadblock

• Macroeconomic headwinds, like high inflation and unemployment, which may impact the likelihood of speculation in volatile assets such as cryptocurrencies

Any negative crypto news might cause a breakthrough of Ether’s existing area of support and result in ETH prices heading toward $2,000. If you have a bearish outlook on Ethereum and ETH prices, it would be ideal to build a trading plan around a stop market leveraged short order by buying the leveraged Perpetual token pair ETH3S/USDT with us.

How to Execute ETH Trades With Bybit

If you're interested in trading Ethereum and making a profit off of the Ethereum Dencun Upgrade, then you might want to read our guide on how to get started with trading ETH. 

First, sign up for a Bybit account and access the Spot trading platform. From there, you can locate ETH3L pairs if you're bullish, or ETH3S pairs if you're bearish. 

Once you're in the trading interface, it's important to change your order type to Stop Market. This type of market order can help you maximize short-term gains while limiting your maximum loss, thanks to the stop-loss in place. (For trading beginners, the stop-loss feature keeps your losses fixed, according to your risk tolerance, so you can trade with greater confidence.)

Before inputting your price levels, it's crucial to check for supply and demand zones. These can help you identify potential support and resistance levels, which can be useful when placing your price levels. However, keep in mind that the strength of these levels can vary based on your personal risk appetite.

Assuming you’ve funded your account, you can proceed to input the fields present in your ETH3L or ETH3S leveraged token stop market order. Once you’ve inputted all the necessary information, submit the order to place your trades. With these tips in mind, you should be able to get started with trading ETH on Bybit and potentially profit from the Ethereum Dencun Upgrade.

Potential Trading Outcomes

Max Profit: Calculated as (Entry − Exit before rebalancing)

Max Loss: Calculated as (Exit − Entry + Volatility Decay + Fees)

Keen on reading more about strategies for trading with Spot and Derivative products on Bybit? Check out our guide on how to trade ETH post-Merge and our article on the Ethereum Shanghai Upgrade for more specific examples.

Other Ways to Profit from the Ethereum Dencun Upgrade With Bybit

Exploring other ways to profit from the Ethereum Dencun Upgrade? Look no further! Bybit is running a total of eight campaigns for you, with a total prize pool of 415,000 USDT to maximize your gains.

Past Ethereum Dencun Upgrade Events

In preparation for the Dencun Upgrade originally planned for October 2023, Bybit hosted two events. If you didn't get a chance to participate in these events, continue reading to discover the upcoming Ethereum Dencun Upgrade events we have lined up!

Learn to Earn From the 5,000 USDT Prize Pool

The first event took place two weeks before the initially-planned Dencun Upgrade, as users could show off their knowledge of the upgrade to earn a share of the 5,000 USDT prize pool!

Take part in the Learn to Earn campaign’s quiz, and get all the answers correct to be eligible for rewards. The first 600 new users to get all answers correct received 5 USDT each, while the first 500 existing users to get all the answers correct, received 4 USDT.

Cancun Supreme Scorer 2023

The second event is known as the Cancun Supreme Scorer 2023. It took place from Sep 25, 2023, 10AM UTC through Oct 13, 2023, 10AM UTC.

To take part in this event, users were required to follow the rules below:

• Registration: Enroll in the event to earn a bonus of 50 points. (Ensure you've completed the Identity Verification to be eligible.)

• Price Predictions: Each day, forecast the price trends of up to eight listed trading pairs. Feel free to make unlimited predictions for each pair.

• Staking Rewards: If your forecast is accurate, your staking points will double — and if your chosen trading pair witnesses the highest daily percentage fluctuation (either increase or decrease), your points will quadruple!

If they wanted to boost their points, they could do so as follows:

• For Newbies: Deposit a cumulative amount of over 100 USDT within a week, and bag 200 points.

• Daily Trades: Earn 100 points daily by engaging in Spot trading (excluding zero-fee pairs) during the event.

• Volume Bonuses: For every 200 USDT traded in Spot, gain 50 points. In addition, trading the prediction pairs or using the grid bot for every 100 USDT will fetch you an additional 100 points. Maximize your earnings by up to 10,000 points daily!

• Referral Rewards: Receive 500 points for each eligible referral. Ensure your referred friend registers on Bybit with your code, and deposits and trades Spot (any amount) during the event.

The grand prize pool stands at 80,000 USDT, split as follows:

• Point Ranking Prize Pool:50,000 USDT

• Prediction Ranking Prize Pool: 30,000 USDT

The Point Ranking Prize Pool is broken down as follows:

• Top 200 Share: The elite 200 participants shared a 30,000 USDT prize pool based on their point proportion. The formula is: Reward = (Individual Points / Combined Points of Top 200) × 30,000 USDT.

• Participation Award: Those who amassed a minimum of 3,000 points shared equally from a pot of 20,000 USDT. This was calculated post-event.

The Prediction Ranking Prize Pool is broken down as follows:

Upcoming Ethereum Dencun Upgrade Events

Stay tuned for the following six events, which will provide you with even more opportunities to earn with Bybit! Check out Bybit’s official X (formerly Twitter) page or Announcements page for more updates. 

Deposit and Earn from the 30,000 USDT Prize Pool — New Users Exclusive

The Deposit and Earn event is being held exclusively for new users. To participate, simply complete the following steps:

1. Sign up for a Bybit account and complete Identity Verification.

2. Deposit a combined value of at least 100 USDT in any of the qualifying tokens (ETH, WLD, MNT, SHIB, ARB, MATIC, OP, COMP, AAVE or LDO), or deposit 100 USDT and buy any of the qualifying tokens as your first trade in your Bybit account. 

Once you’ve completed the above steps, you’ll receive 20 USDT. Please note that rewards will be distributed on a first-come, first-served basis.

Trade to Earn From the 60,000 USDT Prize Pool

Dive into the Trade to Earn event to unlock rewards worth 60,000 USDT! This event is only applicable to the following token pairs:

• ETH/USDT

• WLD/USDT

• MNT/USDT

• SHIB/USDT

• ARB/USDT

• MATIC/USDT

• OP/USDT

• COMP/USDT

• AAVE/USDT

• LDO/USDT

Subevent 1: Engage in Trading and Grab a Share of 50,000 USDT

To stake your claim in this reward pool, engage in trades involving any of the qualifying tokens. Ensure your Spot trading volume crosses the threshold of 100 USDT during the promotional phase. Remember, the more active you are, the heftier your rewards.

Subevent 2: Set up a Grid Bot and Split 10,000 USDT

Participants can equally divide the 10,000 USDT reward by accomplishing the following during the event:

1. Initiate either a Spot Grid Bot or Futures Grid Bot for the aforementioned eligible pairs.

2. Ensure that your bot's trading volume surpasses $100.

Note: When setting up bots, users are restricted to investments in USDT only.

Trade Derivatives and Invite Friends to Earn

The third event enables you to trade derivatives and invite friends to earn a share of the 150,000 USDT prize pool. In fact, you can win up to 2 ETH! 

Stake to Earn From the 40,000 USDT Prize Pool

The next Earn event allows users to unlock rewards worth a total of 40,000 USDT.

Perk 1: Secure High Returns with ARB & OP Staking

For all of our KYC-verified members:

• ARB Staking: Dive into a 7-day fixed savings plan with ARB to enjoy a whopping 99% APR. Plus, get a chance to be part of our 9,000 ARB giveaway. Note: This offer is only valid for the initial 7 days of the event.

• OP Staking: Opt for a 7-day fixed savings plan with OP and reap a 99% APR. Additionally, you could be among the lucky ones to share in our 6,000 OP giveaway. Note: This promotion runs for the concluding 7 days of the event.

Perk 2: Mint stETH & Share in an ETH Reward

Mint stETH via Bybit's ETH 2.0 Liquid Staking during the promotional phase and you’ll not only qualify for up to 7% APR from ETH 2.0 Liquid Staking, but also get a shot at sharing 1 ETH. Ten fortunate participants will be chosen at random to equally divide this ETH reward.

Fiat: Deposit to Earn 30,000 USDT

Another event is Fiat: Deposit to Earn. Please note that all fiat currencies are accepted. Eligible platforms include: Bybit P2P, Fiat Deposit and One-Click Buy. Note: This promotion is tailored specifically for newcomers to Bybit (those who have recently registered, and haven't yet made any deposits). Here's how to participate:

1. Sign up on Bybit and complete Identity Verification.

2. Buy 100 USDT worth of ETH through any of the eligible methods — Bybit P2P, Fiat Deposit or One-Click Buy — to earn 10 USDT in rewards.

ETH Staking Multi-Yields Event

Participate in the ETH Staking Multi-Yields Event to earn from the 20,000 USDT prize pool! You can even earn up to 20% APY, in addition to other rewards.

The Bottom Line

We hope our informative trading guide will help you compose your trading plan. Ethereum’s upcoming Dencun Upgrade presents both opportunities and challenges for investors. 

While the successful implementation of the upgrade could lead to a significant rally in ETH prices that’s fueled by FOMO and speculation, numerous bearish factors could trigger a decline in prices. Therefore, it's crucial for traders to stay updated on crypto news, understand the potential impact of the Cancun Upgrade and develop a robust trading plan that caters to both bullish and bearish scenarios.

Whether you’re bullish or bearish on ETH prices, the Dencun Upgrade solidifies Ethereum’s already solid fundamentals as one of crypto’s top projects. Once Ethereum has successfully completed the Surge portion of its road map, we may witness Ethereum threatening Bitcoin’s top spot on the crypto market rankings for the long haul.

#Bybit #TheCryptoArk