- Ethereum loses ultrasonic money status.
- The total supply has increased by more than 100,000.
Ethereum [ETH] has transitioned from the “ultrasonic money” label as a result of the EIP-1559 upgrade, which changed its deflationary characteristics.
This upgrade reduced Ethereum’s burn rate, leading to a slowdown in the rate at which Ether is removed from circulation.
The overall supply of ETH has increased and there has been a recent increase in the supply of ETH on exchanges. How does the supply at trade fairs compare to the total supply?
Ethereum’s total supply and burnt costs show contrasting trends
The analysis of Ethereum’s supply metric on CryptoQuant reveals notable fluctuations in the overall supply dynamics over the past few months.
From November 2023 to early April 2024, there was a noticeable drop in the total supply of ETH, from over 120.2 million to approximately 120.06 million, representing a reduction of over 100,000 Ether.
Source: CryptoQuant
However, starting April 19, Ethereum’s total supply began to increase, reaching approximately 120.1 million at the time of this analysis.
This recent increase in total supply is attributed to a decline in consumed fees, which began after the Dencum upgrade.
An examination of the burnt compensation metric illustrates a significant decline beginning around March.
During this period, fees burned amounted to approximately 6,000 Ether, which is in stark contrast to the current value of approximately 890 ETH at the time of this analysis.
This significant reduction in fees burned explains the observed increase in Ethereum’s total supply, indicating a shift in deflationary dynamics.
The decrease in costs is also due to the decrease in costs on the network.
Source: CryptoQuant
Ethereum is seeing a drop in overall fees
The recent Ethereum upgrade has led to a reduction in transaction fees, both on the main network and on Layer 2 solutions.
Dates of Coin98 Analysis indicated that Ethereum transaction fees have reached an annual low, averaging 0.00017E, which translates to approximately $0.5 per transaction.
These fees represent a significant decline from the levels seen around February.
Further analysis of the overheads generated on the Ethereum network have shown a noticeable decline recently.
At the time of writing, total fees were approximately $3.6 million, which is in stark contrast to the March peak of approximately $7.8 million.
This downward trend in fees started about a month ago.
The supply of Ethereum on exchanges is increasing
Analysis of the Ethereum exchange offers a notable upward trend, albeit with some interesting nuances.
The increase in currency supply began before the total supply began to increase, with the growth observed between March and time of going to press exceeding 3 million Ether.
At the time of writing, the total exchange supply amounted to more than 16.8 million.
Source: Santiment
Despite this significant growth, exchange supply remained relatively low compared to Ethereum’s total supply. This suggests that Ethereum faces a manageable risk of oversupply.
Furthermore, the comparatively low exchange supply indicates that Ethereum’s current price is not immediately threatened by inflationary pressures.
ETH continues to fall below $3,000
Analysis of Ethereum price development on the daily time frame reflects a challenging period. After falling below the $3,000 price level the previous week, ETH has struggled to regain its footing.
At the time of writing, the stock was trading around $2,900, down about 1.5%.
Source: TradingView
Read Ethereum (ETH) Price Prediction 2024-25
Both the stochastic indicator and the Relative Strength Index (RSI) indicated a negative price development. The RSI in particular indicated a bearish trend as it remained below the neutral line.
However, the current position of these indicators suggested a potential price reversal in the near future, with ETH poised for a possible rebound.