Ethereum Market Shift: Reduced Issuance, Rising Prices

Despite the fact that Ethereum prices are rising, data from UltraSound.Money shows that since the Merge, the platform’s issuance or supply has reduced by 23,948 ETH, or approximately $40 million. This draws attention to a distinctive pattern in Ethereum’s market dynamics.

The current circulating supply of the second-ranked cryptocurrency in the world is 120.49 million. Additionally, with 1,556K ETH burned per day, supply growth is minus 0.7% annually.

The exchange supply has been steadily declining over the past six months following the merger. For those unfamiliar, the Eth network underwent a shift known as the Merge in September 2022 from a proof-of-work [PoW] network to a proof-of-stake [PoS] network.

According to recent research released by renowned on-chain data analytics company Santiment, there is now significantly less ETH accessible on exchanges.

In reality, the amount of ETH accessible for trading or selling has decreased by 37%, which technically suggests a bullish trend in the coin’s value.

Before the September merger, there were 19.12 million ETH on exchanges, worth $31.3 billion. There were 13.36 million ETH worth $19.7 billion in the second week of February.

Since the London upgrade, the market supply of ETH has dropped due to ongoing depletion on exchanges, turning it deflationary. The Ethereum Improvement Proposal [EIP]-1559’s fee-burning mechanism serves as the foundation for the deflationary paradigm.

Ahead of the Shanghai upgrade, many traders opted for staking as a significant portion of ETH moved to self-custody.

Upcoming Ethereum Upgrade: Shanghai To Go Live In March

The following Ethereum upgrade, Shanghai, will go live in March. They have scheduled a hard fork that includes other proposals for network upgrades. Stakeholders and validators can withdraw their holdings from the Beacon Chain during the hard fork. The hard fork will also include other recommendations for network upgrades.

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After completing the Shanghai hard fork, the Beacon Chain will release 16 million ETH, which represents 14% of the total supply, from staking and making it available for trading.

Ethereum temporarily surpassed $1,700 at the time of writing before reverting to its current market price of $1,681. Despite a 7% increase in the last 24 hours, the second-largest cryptocurrency is facing strong resistance at a multi-month high. This may indicate selling pressure at this level, hindering further price growth.

This article conveys general information and the opinions expressed should not be considered personal advice for any individual or specific security or investment product.

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