Ethereum Price Wobbles As Inflation Sees 210,000 Added To Circulation
August 17 2024 - 5:11PM
NEWSBTC
Recent market dynamics have again brought Ethereum’s supply into
the spotlight and reiterated concerns about its inflationary trend.
Earlier this year, Ethereum reached a significant milestone in its
circulating supply, surpassing 120 million ETH and the number
continues to grow. Unlike other prominent cryptocurrencies such as
Bitcoin and Cardano, which have fixed supply caps, Ethereum was
designed with an unlimited supply of tokens. This fundamental
difference makes Ethereum an inherently inflationary asset, one
that has a continuously increasing supply. On-chain data from
Ultrasound.money has shed light on the growing supply of ETH in
recent months amidst notable price fluctuations for the
cryptocurrency. The most recent data indicates that the total
supply of Ethereum has now reached approximately 120.28 million
ETH. Related Reading: XRP Price Prediction: Analyst Says God Candle
Will Send Price To $57 Over the past seven days alone, 16,039 new
ETH tokens have been issued. This pace of issuance corresponds to
an annual inflation rate of 0.70%. Interestingly, this data shows
that 243,886 ETH has been created in the past four months since the
Dencan upgrade in March. What Does This Mean For Ethereum?
Ethereum’s inflationary mechanism is mostly counteracted by burning
tokens. This burn mechanism was introduced as part of Ethereum’s
London Hard Fork in order to introduce a deflationary mechanism to
Ethereum. This mechanism aims to reduce the overall supply of
ETH by burning a portion of the transaction fees, thereby
introducing a deflationary counterbalance. However, data from
Ultrasound.money shows the burns are currently lagging behind
issuance, and Ethereum is now on an inflationary trajectory.
Particularly, 2,028 ETH were burned in the past seven days,
compared to 18,075 ETH issued in the same timeframe. Such a
sustained uptrend in supply growth could cause downward pressure on
the price of ETH in the case of a decline in demand. At the time of
writing, Ethereum is trading at $2,615 with no significant gains or
losses in a 24-hour timeframe. Looking at a broader seven-day price
action shows Ethereum has largely traded within a range of $2,750
on the upper end and $2,530 on the lower end. The latest price
action saw Ethereum rebounding at $2,540 in the past 12 hours. If
this continues, Ethereum could possibly push up and retest $2,750
in the next few hours. Related Reading: Bitcoin Risks Further
Decline As Bearish Death Cross Returns According to the latest
figures from Greeks.live, approximately 184,000 ETH options are set
to expire today. These options represent a substantial nominal
value of $470 million and are characterized by a put-call ratio of
0.8 and a maximum pain point of $2,650. This high put-call ratio
value means market participants are currently buying more put
options than call options, which in turn suggests a bearish
sentiment. Pictured image from Dall-E, chart from
Tradingview.com
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