Ethereum Dencun Update Sparks “Sell The News” Avalanche? And Base Meme Coins Profit?

Immediately after Ethereum (ETH) successfully completed the main net launch of the Dencun upgrade (EIP 4844), fees on layer two coins such as Arbitrum (ARB) dropped dramatically. Many hailed the event as the beginning of a new era so that traders could use these networks and pay pennies for transactions rather than $1 – $50+.

After all, the meme coin trading explosion on Solana (SOL) has been possibly only because the network is so cheap and fast.

Below is an image from a Dune analytics dashboard that shows just how much fees have dropped in the two days after the upgrade. You’ll notice the one-day delay with Arbitrum (in orange) which completed its integration a day after the other L2s.

graphical image depicting the drop in fee prices on ETH L2 protocols.

One drawback to the approach is that these L2s now transmit far fewer fees back to ETH main net. Since the protocol burns its coins (ETH) with the fees, the supply issuance is more inflationary. This may be one reason why ETH prices have dropped about 8% since the upgrade went live.

Another, as many speculated, is that ETH has witnessed a “sell the news” event, such that traders bought before the news on anticipation and sold the actual event. Reality often doesn’t match expectations and that leads to disappointment.

A third suggestion is the rather obvious point that all digital assets have been on an unstoppable ascent lately. It is only natural for the market to experience a pullback.

Finally, the recent dip may simply reflect a trend in the broader macroeconomy. In the United States, inflation continues to remain surprisingly strong, and recent numbers have traders shifting their bets about the first interest rate cut.

If you take a look at the CME Fed Watch tool, you’ll notice that while most still anticipate that June will be the first rate cut, many have shifted their bets to July and some expect a further delay beyond that (about 22%).

Graphical image showing the expected rate cuts shifting to July according to the CME Fed Watch Tool.

Of course, we can’t know for sure. Historically, major upgrades on ETH have been followed by significant coin price rises.

Many now speculate that Base will become the new meme-coin L2 on ETH–one that might rival SOL because it is directly supported by Coinbase and most US dollars are traded on Coinbase. The data below are from The Block and they strongly support this point.

Graphical Image of USD Supported exchange volume depicting Coinbase in a commanding lead.

Happy Trading!

👉Join our Trading Community and Earn Airdrops! 👈

You found this content helpful ?

  1. 1
    Join our free weekly "Bubble Bulletin" for more
  2. 2
    Join us on Discord for live chat and daily updates
  3. 3
    Follow us on Twitter
  4. 4
    Share this content using the buttons below :


This piece of content is provided for educational and entertainment purposes only. Robin Technologies and Analytics LLC is the firm that distributes 1.2 Labs products. The firm does not provide individually tailored investment advice and does not take a subscriber’s or anyone’s personal circumstances into consideration when discussing investments; nor is Robin Technologies and Analytics LLC registered as an investment adviser or broker-dealer in any jurisdiction.

You should expect no financial returns one way or another based on statements contained herein. These points hold equally for any statements that could be attributed to The Art of The Bubble or any related business entities or personnel operating in association with Robin Technologies and Analytics LLC.

If you decide to buy or invest in anything, then your returns and potential losses are your own. No statements about taxation are taxable advice and you are encouraged to consult your own tax professional. You are also encouraged to do your own due diligence before investing in anything.


September 1, 2022

June 22, 2023

July 23, 2022

December 1, 2022

October 23, 2022

October 9, 2022

June 18, 2022

October 10, 2022

July 21, 2022


May 16, 2024

May 15, 2024

May 14, 2024

May 9, 2024

May 8, 2024

May 7, 2024

May 6, 2024

May 2, 2024

May 1, 2024

What do do now?

Join the free 1.2 Labs "Bubble Trading" Bulletin for new trading strategies, macro & sentiment analysis and occasional free airdrops