The Ethereum blockchain is not in great shape: it experiences a significant decrease in its on-chain activity, resulting in a record decrease in the volume of ethn burned daily. A trend that raises questions about the evolution of ETH's offer, and especially the potential impact on the price of cryptocurrency.
A burn of eth in free fall
Since its introduction in August 2021 by the EIP-1559 updatethe Burn of ETH mechanism aims to reduce the inflation of tokens. As a reminder, a portion of the costs paid by users to carry out transactions is automatically withdrawn from traffic, thus limiting the net emission of ETH and, in theory, its inflation.
But not everything goes as planned: Only 53.07 ETHor about $ 106,000, were burned last Saturday, marking a historic low. This decrease reflects a reduced demand for the Ethereum block space.
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According to data from Ultrasound.Money, the total quantity of ETH burned since the implementation of the EIP-1559 amounts to more than 2 millionor about $ 5.8 billion. But the drop in the burn rate reversed the deflationary trend of Ether.
Other indicators of the Ethereum network activity are decreasing. The 7 -day mobile average of active addresses has also reached Its lowest level Since October 2024. In addition, the creation of new addresses, the number of transactions and daily volumes have also decreased in recent weeks.
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Impact on the offer and price of the ETH
The decrease in the burn rate of ETH has direct implications for the supply in circulation. Taking into account the burn rate of the last 7 days, the ETH offer should grow by 0.76 % per year. A slight inflation that does not does not correspond to the ambition of the networkwho wished to make Ethereum an active deflationary during a period of high activity.
As a reminder, unlike Bitcoin which is limited to 21 million units, Ethereum has no supply ceiling. Currently, around 120.18 million ETH are in circulation. Since the implementation of the EIP-1559 and the transition to the Proof of Stake, the ETH emission rate has decreased considerably: the offer has stabilized to 120 million units.
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If this situation extends, we could fear a drop in the price of the ETH, which is already struggling to stabilize after a significant fall of more than 55 % compared to its historic summit.
During a high activity period, a high burn reduces the supply in circulation, creating a rarity which can support or even participate in the increase in ethn price. Conversely, a decrease in burn, combined with a network activity at half mast, can lead to an increase in supply and exert downward pressure on the course.
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Source : Ultrasound Money
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After training in journalism, I worked for a few years in general press before discovering the world of personal finance and the scholarship. Fallen into cryptos since 2020, I am particularly interested in the decryption of news that influence the Cryptos markets. My goal? Always teach my readers more by providing the most precise and the most just possible information.
Justine Ferrari
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