Ethereum price has followed the recovery trend of Bitcoin over the last two days, which has helped it wipe the losses from early February. Currently, the digital asset is up around 9% which saw it break above $1,600 once more. However, the cryptocurrency doesn’t seem to be slowing down as there is still some runway for it.
ETH Deflation Paints Bullish Picture
One of the most bullish arguments for Ethereum right now is the fact that while most coins in the space are experiencing inflation, the coin’s supply is deflating. This is a result of the Ethereum Merge that was completed last year, which works to reduce the supply of ETH in the market.
Over the months that have followed the Merge, there has been a steady decrease in the Ethereum supply. Between the time of the Merge and now, the supply of Ethereum has shrunk by more than 23,900 ETH (around $40 million), a 0.047% decrease since the Merge.
This reduction in supply has pushed the ETH issuance rate into the negative. According to data from the ETH tracking website, Ultrasound Money, the ETH issuance rate now sits at -0.7%.
The burn rate has also accelerated this time, coming out at more than 4,000 ETH burned daily. This means that around 1.55 million ETH are burned per year going by the current burn rate. Additionally, the website projects that by 2025, the total ETH supply will fall below 118 million.
ETH supply expected to fall below 118 million in two years: Source: Ultrasound Money
Can This Push Ethereum Price Above $1,800?
With the current momentum, coupled with the fact that the Ethereum supply is declining rather than increasing, it serves as a bullish basis for the cryptocurrency since lower supply and higher demand are a recipe for rising prices.
ETH, on one hand, is already trying to test the $1,700 resistance. This is a hard one given that bears have pitched their tents at this level, but a break above here can easily guarantee a run-up above $1,800 in short succession.
There is also the fact that over 14% of the total supply worth over $28 billion is still staked in the Beacon contract. This reduced circulating supply and the spike in the Coinbase Premium Index show more attention from investors, all of which work to cement the bullish trend for the digital asset.
At the time of writing, ETH is trending at a price of $1,685. The digital asset’s price is up 8.79% in the last 24 hours and 3.17% in the last seven days.
ETH price remains steady above $1,600 | Source: ETHUSD on TradingView.com
Best Owie on Twitter for market insights, updates, and the occasional funny tweet… Featured image from Ethereum Price, chart from TradingView.com