Ethereum price drops 3% amid Dencun upgrade impact on blob fees

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Sholanke Dele

02.04.2025

Ethereum price drops 3% amid Dencun upgrade impact on blob fees — The drop calls into question the sustainability of Ethereum current price levels

Ethereum price action this week has been notably weak, despite its earlier intraday uptrend this week. After a rally from $1,770 to a four-day high at $1,927 on Tuesday, Ethereum has since declined by over 3%, trading at $1,860 during the European session on Wednesday. This recent drop raises questions about the sustainability of Ethereum’s current price levels, especially as critical support near $1,860 faces increasing pressure.

The weakening price action comes when Ethereum grapples with a significant drop in revenue from its layer-2 (L2) scaling chains. Data from Etherscan reveals that Ethereum’s income from blob fees, its primary source of income from L2, has plummeted to its lowest levels of the year. In the week ending March 30, Ethereum earned just 3.18 ETH (approximately $6,000), a staggering 73% decline from the previous week and a more than 95% drop from mid-March, when Ethereum earned over 84 ETH.

This drop in blob fees stems from the Dencun upgrade in March 2024, which migrated L2 transaction data to off-chain stores known as "blobs." While the upgrade aimed to reduce costs for users, it has had the unintended consequence of significantly cutting revenue for Ethereum. According to data from asset manager VanEck, this revenue reduction could reach as much as 95%.

ETH price dynamics (March - April 2025). Source: Tradingview

Ethereum price faces growing downside risks as technical indicators turn bearish

Ethereum price decline is now testing support at $1,860, and with the 4-hour RSI shifting into bearish territory, the likelihood of a breakdown below this level is increasing. If this support is breached, Ethereum could revisit the previous month’s support at $1,755, which stands as the next key level to monitor. In the short term, a decisive break below $1,860 could signal further downside risks, potentially leading to a deeper retracement.

The combination of a weakening price and reduced revenue from blob fees presents a challenging outlook for Ethereum. The loss of fee income could weigh on investor sentiment and broader market confidence, potentially contributing to further price declines. Short-term price action now hinges on whether Ethereum can maintain support at $1,860. A break below this level would likely lead to a retest of the $1,755 support zone, and a more significant decline may follow if these levels fail to hold.

Ethereum faced significant losses, ending March with a 45% drop in market cap. Despite a brief recovery, its price remained below resistance, with capital inflows declining sharply.

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