|

Analysts anticipate Ethereum supply shock after 100K ETH burned

  • More than 6% of Ethereum's total supply is staked in the ETH2 contract.
  • Ethereum reserves on centralized exchanges have plunged to 18.98 million, and inflows have substantially reduced, leading to a supply shock.
  • Ethereum's mean dollar invested age dips, indicating that dormant dollars invested in the altcoin have started circulating. 
  • These factors are considered bullish indicators for the altcoin's price.

"Triple Halving" narrative underplays as Ethereum's supply on exchanges drops, and the bullish trend resumes. 

Ethereum supply shock is on the horizon

After implementing Ethereum Improvement Proposal 1559 (EIP 1559) in the London Hard Fork, over 100,000 ETH was burned. At the same time, there is an increase in Ether being staked in the ETH2 contract. 

Staking can be considered as a form of "enforced holding." Based on this narrative, since over 6% of Ethereum's supply is now staked, and $100,000 is burned, which is fueling a "supply shock" across exchanges. 

Exchanges' ETH reserves have dropped considerably in the past two weeks, hitting a low of 18.98 million. 

Ethereum reserves on centralized exchanges.

Ethereum reserves on centralized exchanges.

Inflows to exchanges are stifled, and Ethereum netflow on exchanges is low. This signals that less Ethereum is available on exchanges to buy/sell, thus encouraging holding behavior in traders. 

Alongside the supply shock, Ethereum's mean dollar invested age, a metric that calculates how long Ethereum has stayed in its current address and computes the average age of all money invested in Ether, has started decreasing over the past three days. 

A dip in mean dollar invested age signals a movement in the dormant investments made in Ether. Historically, this is a precursor of a price rally in the altcoin. If this downtrend continues, it is likely to impact Ethereum's price positively. 

According to analysts at FXStreet, if Ethereum sustains above its support at $3000, the bullish trend is likely to continue. 

Author

Ekta Mourya

Ekta Mourya

FXStreet

Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.

More from Ekta Mourya
Share:

Editor's Picks

Kraken’s parent plans regulated US perpetual futures on Hyperliquid

Hyperliquid has named Payward, the parent company of crypto exchange Kraken, as its intended first Commodity Futures Trading Commission-regulated deployer on HIP-3 markets. In an X post on Monday, Hyperliquid stated that Payward plans to use its infrastructure to deploy perpetual futures markets for US customers. The proposed arrangement remains subject to regulatory approval.

Pi Network Price Forecast: PI stalls as weak crypto sentiment caps recovery

Pi Network holds steady above $0.0760 stalling after a roughly 2% rebound the previous day. The broader market's weak sentiment and reduced trading volume weigh on the PI token. The technical outlook is bearish, with price capped below a long-term resistance trendline and weak momentum.

Ripple and Stellar outlook: XRP and XLM remain under pressure as bearish momentum persists

Ripple and Stellar continue to remain under pressure, trading below $1.30 and $0.169 respectively, after a mild recovery the previous day. Both XRP and XLM remain below their key Exponential Moving Averages, indicating bearish price action. Moreover, mixed derivatives metrics and cautious on-chain data are capping sustained recovery in XRP and XLM.

Ripple secures OCC approval for National Trust Bank
Brad Garlinghouse, CEO of Ripple, announced in an X post on Monday that the Office of the Comptroller of the Currency (OCC) has granted final approval to charter Ripple National Trust Bank (RNTB). The federally supervised national bank demonstrates Ripple's progress toward building digital asset infrastructure within a regulated financial system.
Bitcoin extends pullback as ETF inflows clash with risk-off sentiment

Bitcoin remains under pressure, trading around $81,800 on Friday, recording modest losses so far this week. Despite a mild pullback, institutional demand showed signs of a comeback with spot Exchange Traded Funds recording $442.67 million in net inflows through Thursday.