The recent launch of Ethereum's long-awaited Pectra upgrade has led to a noticeable impact on the network's supply dynamics. On-chain data shows a significant decrease in the circulating supply of the coin, now at its lowest level in 18 days. This decline in supply is mainly due to increased user activity on the Layer-1 (L1) network. If this trend persists, it is possible that the price of ETH will surge to reach new record highs.

Since the implementation of the Pectra Upgrade, ETH's circulating supply has decreased significantly, currently standing at 120.69 million ETH, as reported by Ultrasoundmoney. This network upgrade, which enhances validator limits, introduces smart wallets, and enhances network efficiency, has driven a surge in network activity, causing a reduction in ETH supply as user demand rises.

Data from Glassnode indicates that the number of active addresses on the Ethereum network has reached a 30-day high, indicating increased user involvement. This surge in network activity signifies growing demand and utilization, often leading to higher gas fees and increased ETH burning. The increased burning of ETH coins reduces the circulating supply, putting upward pressure on the price of the altcoin.

As more ETH coins are burnt, the circulating supply decreases, creating upward pressure on the altcoin's value. The price of ETH on the market is currently trading above a horizontal channel that constrained its price from April 23 to May 7. Resistance was encountered at $1,872 during this period, with support found at $1,744. If the breakout continues, ETH could target the psychological $2,000 level and potentially push further towards $2,235. Conversely, a failed retest of this breakout could lead to a price decline to $1,744 or even down to $1,564 if support at that level is breached.