While ethereum has not been entirely consistent with its bullish trajectory in recent weeks, its circulating supply has done the opposite. According to data According to Ultrasoundmoney, the circulating supply of eth has skyrocketed to over 120.72 million eth as of today.
While this increase in supply is not directly negative for eth, it still marks a notable shift in the network dynamics, largely driven by the adoption of ethereum’s proof-of-stake (PoS) model.
Increasing supply: how and why?
The increase in the total ethereum supply to 120.72 million eth, as shown by data from Ultrasound.money, reflects the growing network activity over the past month.
In this period alone, ethereum saw the issuance of 77,102 eth, while 19,402 eth was removed from circulation via a burning mechanism introduced in the network's recent London Hard Fork.
The net increase of approximately 57,653 eth highlights a gentle rebound in the annual supply growth rate from 0.58% to 0.69% over the past 7 days.
<img class="wp-image-635811 size-large" src="https://technicalterrence.com/wp-content/uploads/2024/08/Is-Ethereum-ready-for-inflation-Supply-hits-new-high-as.png" alt="ethereum supply changes over the past 7 days” srcset=”https://www.newsbtc.com/wp-content/uploads/2024/08/Screenshot-2024-08-15-at-16.09.55.png?w=2292 2292w, https://www.newsbtc.com/wp-content/uploads/2024/08/Screenshot-2024-08-15-at-16.09.55.png?w=460 460w, https://www.newsbtc.com/wp-content/uploads/2024/08/Screenshot-2024-08-15-at-16.09.55.png?w=768 768w, https://technicalterrence.com/wp-content/uploads/2024/08/Is-Ethereum-ready-for-inflation-Supply-hits-new-high-as.png 860w, https://www.newsbtc.com/wp-content/uploads/2024/08/Screenshot-2024-08-15-at-16.09.55.png?w=1536 1536w, https://www.newsbtc.com/wp-content/uploads/2024/08/Screenshot-2024-08-15-at-16.09.55.png?w=2048 2048w, https://www.newsbtc.com/wp-content/uploads/2024/08/Screenshot-2024-08-15-at-16.09.55.png?w=750 750w, https://www.newsbtc.com/wp-content/uploads/2024/08/Screenshot-2024-08-15-at-16.09.55.png?w=1140 1140w” />
In particular, with ethereum's transition from the Proof-of-Work (PoW) model to the PoS model, the network has not only achieved a major shift in security but also increased the rewards for staking.
As for the possible reasons behind the increased supply, there are currently around 33.9 million eth staked on the network, generating substantial rewards in newly minted eth.
<img class="wp-image-635815 size-large" src="https://technicalterrence.com/wp-content/uploads/2024/08/1723813557_91_Is-Ethereum-ready-for-inflation-Supply-hits-new-high-as.png" alt="Total eth in play” srcset=”https://www.newsbtc.com/wp-content/uploads/2024/08/Screenshot-2024-08-15-at-16.15.00.png?w=2706 2706w, https://www.newsbtc.com/wp-content/uploads/2024/08/Screenshot-2024-08-15-at-16.15.00.png?w=460 460w, https://www.newsbtc.com/wp-content/uploads/2024/08/Screenshot-2024-08-15-at-16.15.00.png?w=768 768w, https://technicalterrence.com/wp-content/uploads/2024/08/1723813557_91_Is-Ethereum-ready-for-inflation-Supply-hits-new-high-as.png 860w, https://www.newsbtc.com/wp-content/uploads/2024/08/Screenshot-2024-08-15-at-16.15.00.png?w=1536 1536w, https://www.newsbtc.com/wp-content/uploads/2024/08/Screenshot-2024-08-15-at-16.15.00.png?w=2048 2048w, https://www.newsbtc.com/wp-content/uploads/2024/08/Screenshot-2024-08-15-at-16.15.00.png?w=750 750w, https://www.newsbtc.com/wp-content/uploads/2024/08/Screenshot-2024-08-15-at-16.15.00.png?w=1140 1140w” />
This large-scale staking appears to be contributing significantly to the increase in the total supply of ethereum. Moreover, the staking process has been further amplified by the resttaking trend, where participants reinvest their staking rewards into the network.
This re-staking cycle creates a compounding effect on the issuance of new eth, boosting supply even as the network moves into a “seemingly” inflationary trajectory after the initial deflationary expectations set by the eth burning mechanism.
ethereum Market Performance
So far, ethereum appears to be experiencing a gradual price increase, from $2,500 last Thursday to currently trading at $2,652 at the time of writing, marking a 9.3% increase over the past 7 days.
x/PkmK9Fy7/” alt=”ethereum (eth) price chart on TradingView” />
This increase in value coincides with eth’s market cap valuation, which saw an increase of almost $20 billion over the same period. Despite this increase, eth’s daily trading volume has seen the opposite.
Notably, over the past week, this metric plummeted from over $21 billion to the current $12.8 billion. Despite this, many analysts in the cryptocurrency space remain bullish on ethereum.
Earlier today, a well-known analyst known as crypto titan x has set a $3,000 target for eth. According to the analyst, eth looks set for a major rally as a “CME futures gap” to the upside remains unfilled.
<blockquote class="twitter-tweet”>
twitter.com/hashtag/Altcoins?src=hash&ref_src=twsrc%5Etfw” target=”_blank”>#Altcoins twitter.com/hashtag/ethereum?src=hash&ref_src=twsrc%5Etfw” target=”_blank”>#ethereum $3000 Goal twitter.com/hashtag/eth?src=hash&ref_src=twsrc%5Etfw” target=”_blank”>#eth It looks ripe for a move, with a CME futures gap above still waiting to be filled. photo.twitter.com/6lC2d6lgQ6
– Cryptocurrency titan (@Washigorira) twitter.com/Washigorira/status/1824097217340215356?ref_src=twsrc%5Etfw” target=”_blank”>August 15, 2024
Featured image created with DALL-E, chart by TradingView
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