The global Ethereum supply has contracted by just over 4,700 ETH, or about $9.5 million, since Monday. This is a significant deflationary period in months, and the rally appears to have halted the token’s recent inflationary spiral. Ethereum touched $2,000 today for the first time since July, and is currently at $2,020. This deflationary sea change is due to the fee-burning mechanism that’s governed Ethereum since 2021, as higher gas fees lead to more ETH being “burned” by the network. Average gas fees on Ethereum have more than doubled since Sunday, and NFT trading volume hit a three month high this week. According to Alice Kohn, Glassnode’s head ETH analyst, the deflation mostly stemmed from altcoins, with Uniswap currently ranking as the leading gas guzzler on the Ethereum network. Some analysts have predicted that Ethereum’s altcoin-fueled deflationary run this week could signal that the bottom is in for the token, and that ETH is now set to climb towards $3,000. However, Kohn has cautioned that funds may flow into Bitcoin first and bypass Ethereum.
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You can read more about this topic here: Decrypt: Ethereum Has Gone Deflationary Again—Here’s Why and What It Means