Regardless of Ethereum’s odd price action over the past few days, the second-largest crypto by market cap has been breaking records behind the scenes. According to Ultrasoundmoney, ETH supply deflation has recently hit a record high as the total ETH supply has dropped by nearly 1% in the past 30 days.
This drop in supply comes at a time when the ETH price has dipped in recent weeks and is currently showing a bullish trend. Over the past three days, ETH has surged by nearly 10% after surviving major losses from last week.Â
Deflation Ramps Up As Ethereum Supply Plummets
No doubt, Ethereum’s transition into a proof-of-stake consensus has been a blessing to the network. Not only has it impacted the asset’s supply positively, but it has also been beneficial to the network’s overall growth.Â
According to data from Ultrasound.money, the Ethereum network is currently ramping up to be deflationary as the network supply has plummeted by 63,287 ETH at the time of writing since the merge took place last September.Â
With Ethereum’s current supply sitting at 120.457 million, the ETH burn rate has moved to 1,219,000 and its supply has also plunged by 0.44% in the past 30 days. This proves that the asset could only continue to reduce its supply over time and eventually become deflationary.
As projected by Ultrasound.money, Ethereum supply would reach 117 million by the year 2025. Issuance rewards for stakers are expected to be about 4% per year, surpassing the burn rate for non-stakers, which is around 1.8% per year.Â
Meanwhile, most of the burn in ETH resulting in a plunging supply can be attributed to ETH transfer from major DeFi applications including Uniswap, Tether, and the recently hyped Blur airdrop which triggered a surge in Ethereum network activity.
Overall, a constant record high in deflation and a continual plummet in Ethereum supply could eventually leave ETH price to be valued way higher than it is now, especially as demand continues to increase given the network’s dominance in the DeFi and NFT ecosystem.
ETH’s Continous RallyÂ
ETH price has rallied by nearly 15% in the last couple of days, and at the time of writing, the surge does not seem to be slowing down anytime soon as the asset has just broken above $1,700 to trade at $1,741. The asset’s price is now up by 8% in the last 24 hours.
In contrast, ETH’s trading volume has also indicated major buying pressure as the asset’s volume surged from $8.6 billion on Monday to $15.9 billion over the past 24 hours. Ethereum’s market cap has surged by more than $20 billion over the same period.
Meanwhile, Ethereum is still down by 64% from its all-time high of $4,891 seen in November 2021 despite its ongoing rally. With the Ethereum Shanghai upgrade drawing close amid a bullish cycle, chances are ETH could see a rebound close to its peak or beyond.
Featured image from Unsplash, Chart from TradingView
