Understanding Ethereum’s Inflationary Trend 📈
Recent market dynamics have once again highlighted Ethereum’s supply and raised concerns about its inflationary trend. With a circulating supply exceeding 120 million ETH and a continuous growth pattern, Ethereum stands apart from cryptocurrencies like Bitcoin and Cardano, which have fixed supply limits. This distinction makes Ethereum an inflationary asset, with a supply that keeps expanding.
The Growing Supply of Ethereum 📊
Data from Ultrasound.money reveals the steady increase in ETH supply in recent months, coinciding with significant price fluctuations in the market. As of now, the total Ethereum supply has topped 120.28 million ETH, with the issuance of 16,039 new tokens in the last week alone, translating to an annual inflation rate of 0.70%. Since the Dencan upgrade in March, a total of 243,886 ETH has been minted in the last four months.
Implications for Ethereum’s Future ðŸ’
Ethereum’s inflationary nature is offset by its token burning mechanism, introduced during the London Hard Fork to create a deflationary aspect. This mechanism aims to reduce the overall ETH supply by burning a portion of transaction fees. However, current data shows that the rate of burns lags behind issuance, pointing towards an inflationary trajectory. With 2,028 ETH burnt in the last week compared to 18,075 issued, there is a risk of downward pressure on ETH prices if demand weakens.
As of now, Ethereum is trading at $2,615, showing stability with minimal fluctuations in the past 24 hours. Over the last seven days, the price has ranged between $2,750 and $2,530, with a recent rebound at $2,540. If this trend continues, Ethereum might test the $2,750 level in the near future.
Evaluating Options and Market Sentiment 📉
According to data from Greeks.live, around 184,000 ETH options are set to expire today, representing a substantial value of $470 million. With a put-call ratio of 0.8 and a maximum pain point at $2,650, the high put-call ratio suggests a bearish sentiment among market participants. This indicates a preference for put options over call options, reflecting a cautious outlook on Ethereum’s price movements.
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