ETH Craters to All-Time Shortage: Could This Trigger a Price Rally for Ethereum to $3000?
According to data from Ultrasoundmoney.com, the supply of Ethereum ($ETH) has decreased by 47,272 tokens in the last 30 days. As of December, 2023, Ethereum's supply reached 120,211,639 – the lowest since the merger.
The merger marked one of the biggest upgrades to the Ethereum network as Ethereum moved from the original Proof of Consensus (PoW) to Proof-of-Stake (PoS). As a result, Ethereum avoided post-merger mining and adopted coin to verify transactions as a PoS method.
Similarly, Ethereum's energy consumption has been reduced by 99.98%, which is said to reduce its carbon footprint by 99.99%.
Here is a big change.
It is estimated that if Ethereum continues with PoW, the supply of Ethereum could increase to 4.7 million. Now with PoS, thanks to EIP-1559, the total supply of ETH has decreased over time.
Ethereum's EIP-1559 implementation introduced a method of burning transaction fees, leading to a decline in ETH supply. As network traffic increases, gas fees increase, thereby increasing the amount of ETH burned. This method ultimately benefits the long-term sustainability of the network.
During the first PoW, Ethereum's inflation rate was usually around 3.196% per year. Ethereum had its first price drop in November last year due to an increase in network activity, a month after the merger. It was also the month that the FTX saga rocked the industry.
Following the collapse of FTX and the lack of confidence in decentralized exchanges, crypto analysts at Compass Point Research and Trading have observed a surge in ETH on decentralized exchange Uniswap. This trend coincides with continued growth in activity in the NFT marketplace.
Driven by Bitcoin's bullish momentum, the Ethereum network and many other protocols, including both NFT and DeFi transactions, have seen remarkable activity in recent months.
Ethereum gas fees have experienced a significant increase over the past month. Average pay now stands at 36.2 gwei. According to on-chain data, the network fee has reached about 5.47 ETH.
Will Ethereum hit $3,000 in 2023?
Ethereum (ETH) has been on a tear since early October, breaking above an earlier descending resistance line in November and continuing to climb at an accelerated pace. After briefly encountering resistance in the horizontal zone, ETH rose to a new yearly high of $2,403 on December 9.
However, the rally did not last long and the ETH price has been trending downwards ever since. Yesterday, the decline intensified, falling to $2,145, slightly above $2,200 today.
2024, the next major update Ethereum Cancun-Deneb, is set to be a monumental year for the Ethereum network. This update aims to significantly reduce transaction fees on Layer-2 protocols through EIP-4844, also known as proto-sharding. Additionally, the introduction of “blobs”, a novel data transfer model, addresses the challenge of continuous data availability in the network.
The success of the Cancun-Deneb upgrade has the potential to significantly increase the adoption of Layer-2 solutions by attracting more users and developers to these networks.
Lower transaction fees make Layer-2 protocols more attractive to decentralized applications (DApps) and users, which can lead to increased network usage and activity.
Beyond adding new features, upgrades are critical to maintaining and improving the security and stability of the network. A successful upgrade ensures that the Ethereum network is robust and secure, which is essential to gaining the trust and confidence of users and developers.
Positive developments, especially related to technical upgrades and upgrades, often lead to positive market sentiment, which can contribute to a favorable price trend for Ethereum.
In the year In 2024, the price trends are very high. It's only a matter of time until we see more record highs.
