Ethereum’s Deflationary Status in the Spotlight as Circulating Supply Decreases
Ethereum is experiencing a significant decline in the number of ETH tokens in circulation, highlighting its deflationary status. Over the past seven days, more than 14,160 ETH has gone out of circulation while only around 16,500 ETH has been issued during the same timeframe. This trend continues a pattern where the number of tokens being burned exceeds the number of tokens being issued. In the last 30 days alone, over 106,000 ETH has been burned compared to just over 70,000 ETH being issued.
Validators Exiting and Increased Network Activity Contribute to Deflationary Trend
The deflationary trend can be attributed to several factors. One factor is the increasing number of validators leaving the Ethereum ecosystem since October. Additionally, network activity on Ethereum has seen a significant increase with over a million daily transactions in the last seven days. This surge in activity has caused gas fees to spike and more ETH to be burned through the EIP-1559 protocol.
Expectations for Continued Deflationary Trend
The rise in network activity on Ethereum can be linked to preparations for an upcoming bull run projected to begin in 2024. The trading volume of non-fungible tokens (NFTs) on Ethereum has also played a role in this surge. Furthermore, if pending Ethereum Spot ETF applications are approved, it is expected that more liquidity will flow into the ecosystem, leading to increased trading activity. As Ethereum maintains its deflationary status with fewer tokens in circulation, investors can anticipate a bullish trajectory for ETH.
Hot Take: Ethereum’s Deflationary Status Gains Momentum
Ethereum’s deflationary status continues to gain momentum as the circulating supply of ETH decreases. This trend is driven by factors such as validators exiting the ecosystem and increased network activity. As Ethereum prepares for an upcoming bull run and potential approval of Ethereum Spot ETFs, the demand for ETH is expected to rise further. With fewer tokens in circulation, the value of ETH is likely to increase, making it an attractive investment option. Currently trading at around $2,270, Ethereum’s upward momentum shows promising signs for investors.
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