Ethereum Deflation Surges as Total ETH Supply Decreases by 1%

Even though the price action of Ethereum has been odd in the past few days, it is breaking every record away from the public eye. Ethereum deflation just hit a record high due to a 1% percent decrease in its market supply in the last month.

Ethereum supply has dropped at a time when the Ethereum price is showing some recovery after the continued bearish trend. After a week of continued losses, ETH has now increased by 10% in price.

The transition of Ethereum from proof of work to proof of stake consensus mechanism has been a blessing for the cryptocurrency. It has positively impacted the growth and market supply of Ethereum. Recently, Ethereum has been setting itself up to become deflationary, as the network decreased the market supply of ETH tokens by 63000 ETH. This comes six months after the merge.

The current supply of Ethereum sits at 120,457 million ETH. The burn rate of Ethereum has increased to 1,219,000, which has caused its supply to decrease by 0.44% in the last month. If this trend continues, the time is near when Ethereum will become a deflationary asset.

Due to recent stats, Ethereum’s supply will decrease to 117 million by 2025. Stakers are enjoying around 4% in rewards per year, while the burn rate is 1.8% per year for non-stakers.

The recent decrease in ETH supply can also be linked to the transfer of ETH tokens from UniSwap, USDT, Blur, and other major DeFi applications. This activity has also caused a sharp increase in Ethereum’s network activity.

An increased rate of deflation and decreased supply can eventually push the ETH price way higher than it is today. That’s because the demand for Ethereum is continuously increasing because of its increasing dominance in the NFT and DeFi space.

ETH’s Continuous Bullish Growth

The price of Ethereum has increased by 15% in just a few days, and the trend doesn’t seem to be slowing down anytime soon. The trend is picking up pace.

This is also coupled with the fact that the demand for Ethereum has increased exponentially. There’s a lot of buying pressure even after the asset’s volume increased from $9 billion to $16 billion in a short time. Ethereum’s market cap now sits at $20 billion and is continuously increasing.

While the second largest cryptocurrency is picking up some pace once again, it is still way below its all-time high of $4,891, which was seen at the end of 2021. With the upcoming Shanghai Upgrade, Ethereum is speculated to cross its peak and go beyond that.