Greater than 2.8 Million Ethereum (ETH) have been burned since Ethereum’s London update went live.
This was revealed by the burn page of beaconcha.in, reports by which a total of 2,847,802.9 Ethereum (ETH) have been burned to date. At today’s prices, their dollar value is greater than 4.6 billion.
Ethereum (ETH) updates
The London fork took place on 5 August 2021, and introduced EIP-1559, which provides for the burn of some of the Ethereum (ETH) paid as charges on each transaction.
The goal was to make Ethereum (ETH) deflationary, and in reality that is exactly what happened.
Nonetheless, since the Merge in September 2022, Ethereum’s circulating supply has decreased by 2,600 Ethereum (ETH), reports by ultrasound.money.
This can be clearly seen on Etherscan: while until August 2021 the circulating supply was increasing strongly and steadily, with the London update it started to grow much more moderately. Furthermore, after the September 2022 switch to Proof-of-Stake it even began to shrink.
In the last 130 days, it has shrunk by less than 0.1%, without any increase. Generally, inflation of the money supply reduces the real value of coins, so the important thing would be that it does not increase, or increases very little.
Looking instead at the last 365 days, Ethereum (ETH) supply increased by 2%, but only because for almost two-thirds of this period Ethereum (ETH) was still according to Proof-of-Work.
The shift to PoS by Ethereum (ETH) (ETH)
In particular, the move to PoS has drastically reduced the number of new Ethereum (ETH) that are announced with each new block, because mining has been eliminated.
Mining, which works only with PoW, has high costs, so to be maintained it essentially has to be well remunerated. As long as Ethereum (ETH) was according to PoW it was in reality necessary to make available more Ethereum (ETH) than was burned.
Although while before August 2021 Ethereum (ETH) was PoW-based and had no fee burn, at the beginning from August 2021 until September 2022 it continued to be PoW-based, but with the fee burn. In those thirteen months, circulating supply continued to increase, although at a lower percentage than before.
On the other hand, starting in September 2022, with the shift to PoS and the end of Ethereum (ETH) mining, it was no longer necessary to make available large amounts of new Ethereum (ETH) to pay miners sufficiently, and this allowed Ethereum (ETH) creation to be reduced to a level below that of Ethereum (ETH) burned with fees.
The result has been a reduction in circulating supply, although to be able to fully measure and appreciate this it will be necessary to wait until September of in the year, or twelve months after the move to PoS.
The price of Ethereum (ETH) (ETH)
Nonetheless, what is surprising so far is the fact that the price of Ethereum (ETH) has not increased significantly in the meantime.
In reality, the present price is yes higher than it was at the end of September 2022, but lower than it was in the days just before the Merge, i.e., the switch to Proof-of-Stake that took place on 15 September 2022.
To put it another way, after the Merge it dropped, and then dropped further in November owing to the FTX Trading Ltd bankruptcy, and so far has not is still been able to return to pre-Merge levels.
On the other hand, it is worth keeping in mind that from August 2021 until November of the same year it had risen quite a lot (+80 percent to the peak), and then dropped for greater than 6 months.
The present price is greater than 40 percent lower than when the London update was introduced, and 15 percent lower than when the Merge occurred.
This implies that in the short and medium term it is not monetary policies but market trends that affect the price the most. To put it another way, both the London update and the Merge had no whole lot of impact on price in the medium term, but could have an impact in the long term.
Something interesting is the fact that the 2022 Ethereum (ETH) low was touched before the Merge, and not in November with the FTX Trading Ltd collapse, and that the bear market decline of the previous cycle, in 2018, was 95 percent while the 2022 decline was “only” 82%.
Instead, seeing as that the price of Bitcoin (BTC) after June 2022 dropped once more, making an annual low in November, it is possible that the Merge and the fact that Ethereum (ETH) since September 2022 has evolved weakly deflationary helped the price to stop sliding below the June lows.
Nonetheless, from late April to late September 2022 the price of Ethereum (ETH) had shed slightly greater than that of BTC, with a very similar tendency, while from October onward the tendency was slightly different. Nevertheless, from the end of September 2022 to now Bitcoin’s dominance has been growing from 37 percent to 41%, while ETH’s dominance has only risen from 16 percent to 18%.
For now, the price tendency of Ethereum (ETH) still comes after the general tendency of the cryptocurrency market, which as a result is influenced by the price tendency of BTC, but it is not necessarily the case that in the long run this correlation will continue.