The trend of accelerated growth in the price of Ethereum compared to Bitcoin may continue due to a more constructive deflationary policy, Amberdata admitted. Writes about this CoinDesk.
Over the past seven days, the price of the second largest cryptocurrency by capitalization has increased by more than 17%, while digital gold quotes have increased by only 9.4%.
Data: CoinGecko.
At the same time, attention is still focused on Bitcoin amid the launch of spot ETF trading on January 11 and the influx of funds into the products, as well as expectations of halving in April. As a result of reducing the block reward from 6.25 BTC to 3.125 BTC, the coin issuance rate will be halved.
However, investors may soon turn their attention to the “remarkable decline in Ethereum market supply,” Amberdata derivatives director Greg Magadini noted in a weekly update.
As a result of the implementation of a large-scale update of The Merge in 2022, the network switched to the Proof-of-Stake consensus algorithm, and also implemented a mechanism for burning part of the commissions.
“Everyone is talking about the Bitcoin halving in April, but this is nothing compared to the active “REDUCTION” of the ETH supply that has already been happening since September 2022,” Magadini said.
According to Ultrasound.money, since the hard fork, about 0.36 million ETH have been taken out of circulation, the current supply is 120 million coins. The inflation of the first cryptocurrency during this period was 1.71%.
Following the registration of the Bitcoin ETF, industry expectations grew for SEC approval of similar products for Ethereum. The price of the cryptocurrency updated its local maximum after crypto-influencer Ash Crypto published a rumor about a positive decision by the regulator before the end of March. The asset rose in price by more than 3% during the day, reaching levels around $2,930.
“Combine the ETH supply burn with staked dormant coins, and also mix with spot ETFs that are actively putting assets into cold storage, and suddenly the cryptocurrency supply story becomes as bullish as it can be from a fundamentals perspective,” Magadini emphasized.
In January, QCP Capital analysts also predicted that in the medium term, the anticipation of the launch of spot Ethereum exchange-traded funds will become a factor in the growth of the cryptocurrency outpacing Bitcoin.
Let us recall that in February, the share of the ETH supply blocked in staking reached 25%, and demand for the service grew to a four-month high.
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2024-02-19 14:19:27
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