ETH is on a Deflationary Path
Ethereum (ETH) has been deflationary since its move to PoS or proof-of-stake. The coin’s issuance has steadily dropped since the change, but the price has moved up to a 5-month high.
Currently, the altcoin is trading at $1,700 as evidence of the declining supply, and consistent demand among crypto market participants propels the crypto higher.
In addition to its deflationary path, Ethereum’s transition to the energy-saving proof-of-stake mechanism has also been a key factor in its recent success. The new mechanism has helped reduce Ethereum’s power consumption by over 99%, making it one of the most energy-efficient cryptocurrencies on the market.
The altcoin’s shrinking supply and consistent demand have fueled a price rally that has increased Ethereum’s value significantly since the height of the crypto winter in 2022, according to UltraSound. Earlier Monday, the token briefly traded above the $1,700 level before consolidation at the round figure.
Furthermore, data from UltraSound reveals that the issuance of Ethereum’s token has dipped to its lowest level since late September 2022. This decline in issuance is a positive development for investors as it signals a continued reduction in the supply of ETH, which could further fuel its price rally.
ETH and Its Record High Tokens Staked
Over 16.60 million Ethereum tokens have been staked in the last few months, a record high in ETH’s history. Despite the upcoming crypto unlock, holders are aggressively staking ETH in the ETH2 deposit contract, indicating their confidence in the long-term potential of the altcoin.
While the value of ETH may fluctuate with market conditions, the total number of users depositing on the Beacon Chain contract provides a reliable indicator of trader decisions to stake the altcoin. This data on Beacon Chain shows that investors are increasingly willing to commit their holdings to long-term staking.
Furthermore, ETH holders are not stopping at staking on the ETH2 deposit contract alone. Many also turn to liquid staking on platforms like Lido DAO. This staking is reducing the supply and further fueling ETH’s bullish narrative.
Technical Overview of ETH
The price of Ethereum has recently cleared out its losses from the past half year to hit $1700. However, many analysts believe the altcoin has much more potential and will soon target the $2,500 level.
As Ethereum’s supply continues to shrink due to staking and increased demand from users and investors, the altcoin’s price is expected to continue its upward trajectory.
Analysts have identified $1,935 as the next resistance level for ETH as the price rises. If the altcoin can break through this level, it will likely continue to rise toward its target of $2,500.