Ethereum First Became Deflationary After The Merge

von Eva Fox Oktober 14, 2022

Ethereum First Became Deflationary After The Merge

About a month ago, Ethereum fully switched to Proof of Stake (PoS). Many expected that the price of the asset would skyrocket after this, as the supply level would decrease, but the cryptocurrency has only now acquired a deflationary character. Over the past week, Ethereum supply has decreased by 0.13%. Experts attribute this to two factors — the spike in gas prices and the XEN mint, which caused a deflationary ETH burn rate. The shift from miners to validators has led to a reduction in rewards. In this regard, the rate of appearance of new “coins” decreased by approximately 90%.

Nevertheless, the number of new blocks continued to grow. And instead of a reduction in the gas price, users saw it increase. It is noteworthy that the price of the asset did not increase, but fell. Over the past week, the rate has fallen by more than 5%. At the time of writing, ETH is trading at $1,289.5 per coin.

Investors are counting on a slowdown in Ethereum supply to push prices higher. This is quite logical if we are talking about deflationary assets. But in the near future, the trend may go down. This is due to the position of some traders. 1.22 million addresses are holding 8.38 million ETH from a break above $1,300. By selling at different break-even points, and these assets were purchased at $1325-1365, they only inhibit the upward trend.

© 2022, Eva Fox | Tesmanian. All rights reserved.

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Article edited by @SmokeyShorts; follow him on Twitter








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