As a seasoned researcher who has witnessed the meteoric rise and fall of numerous digital assets, I find myself constantly scrutinizing the market dynamics to identify trends and patterns that might indicate potential shifts or pitfalls. In the case of Ethereum, its inflationary trend is a topic that has piqued my interest for quite some time now.
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 many well-known cryptocurrencies like Bitcoin and Cardano that come with limited token supplies, Ethereum was initially created to have no cap on its token production. This characteristic sets Ethereum apart as a potentially inflating currency, since its supply expands continuously rather than staying constant or decreasing over time.
Data recorded on the blockchain from Ultrasound.money reveals that there’s been a significant increase in the Ethereum (ETH) supply over the past few months, coinciding with volatile market prices for the cryptocurrency. As of now, the total amount of Ethereum in circulation is approximately 120.28 million ETH.
For the last week, a total of 16,039 new Ethereum tokens have been minted. This rate of minting translates to an annual inflation rate of approximately 0.70%. It’s worth noting that over the past four months since the Denis upgrade in March, a grand total of 243,886 ETH has been generated.
What Does This Mean For Ethereum?
The inflation in Ethereum is largely offset by destroying tokens through a process called “burning”. This burn method was implemented during the London Hard Fork update to create a deflationary aspect within Ethereum. Its purpose is to decrease the total amount of ETH in circulation by incinerating a portion of the transaction fees, thereby establishing a deflationary check on the system.
Contrary to what’s happening with Ethereum, data from Ultrasound.money indicates that burns are trailing issuance at the moment. This means that Ethereum is moving towards an inflationary phase. Specifically, 2028 ETH were burned in the last seven days, while 18,075 ETH were issued during the same period. If this trend of increased supply continues and demand decreases, it could potentially lead to a drop in the price of ETH.
Currently, Ethereum is being exchanged for approximately $2,615, with no substantial changes in value within the last day. However, a more expansive view of the past week reveals that Ethereum has predominantly stayed within a price range of around $2,750 at its highest and $2,530 at its lowest. In the last 12 hours, there’s been a noticeable rebound in Ethereum prices at $2,540. If this trend persists, it might lead Ethereum to test $2,750 again within the next few hours.
Based on data from Greeks.live, it’s expected that about 184,000 ETH options will expire today, equivalent to around $470 million in value. These options have a put-call ratio of 0.8 and a maximum potential loss point of $2,650. This high put-call ratio indicates that traders are purchasing more put options than call options at the moment, implying a generally pessimistic outlook on the market.
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2024-08-18 00:22