The recent Ethereum network update brought with it a fee-burning mechanism that will make Ethereum one of the first deflationary assets in the crypto market. Due to the possible gradual surge in asset prices, the crypto community expects Ethereum to deflate. After implementing the network update, we saw almost 4,000 ETH burn every day.
Unfortunately, due to current market conditions and trends, the price of Ethereum did not follow the impending burning “hype” of 100,000 ETH and fell almost 5% in one day. Ethereum has pulled back nearly 10% from the local high of $3,383 hit on August 23.
Ethereum Network Burns More ETH Than They Mine
As of the time of writing, 98,983 ETH were destroyed, the equivalent of nearly $300 million. In the past, the equivalent of Ethereum in USD equivalents was realized on the market and additional sales capacities were created, which can exacerbate the current market decline.
The first deflationary block on the Ethereum network appeared on August 5th, which meant that more ETH was burned than mined. According to previous calculations, the circulating supply of Ethereum will begin to decline around 2022. Before that, the circulation of Ethereum will exceed the extent of the destruction. The circulating supply of deflationary assets is gradually decreasing and, according to the law of supply and demand, prices can continue to rise.
Traders and analysts indicated that a popular bearish pattern has formed on the daily chart, known as a “double top,” which is usually indicative of a potential reversal.
Ethereum (ETH) Hovers at $3,100
So far, Ethereum (ETH), the world’s second-largest cryptocurrency, has seen an amazing upturn in 2021. Earlier this week, the ETH price rose as high as $3,350. However, it has been subject to partial retracement since then. At press time, ETH is down 3.3%, with a transaction price of $3,113 and a market value of $365 billion.
However, the improvement in data on the chain shows that Ethereum fundamentals are strong right now. On the annual chart, the supply of Ethereum (ETH), which is held by exchanges, has fallen sharply. The on-chain data provider CryptoQuant pointed out that the ETH reserves on all trading platforms were between 26.29 million and 19.22 million ETH in the past year. This means that traders are more willing to hold their ETH for further profit rather than choosing profit bookings.