Ethereum Supply Drops To Record Lows

Asset supply continues to decline significantly as the post-merge network transitions to a proof-of-work model. It is thought that the decrease in the supply of Ethereum has also been affected by the fact that the markets have been active in recent days. With the uptrend in the crypto markets, investors’ increasing transactions on the Ethereum network increases the amount of Ether burned in each transaction, contributing to the downward trend of the supply.

In addition, the activity seen in the NFT markets in recent days has caused an increase in Ethereum transactions. The decrease in Ethereum supply has a positive effect on the asset price, according to the general view. That’s why market participants are keeping a close eye on the Ethereum supply. On the other hand, the Ethereum network will see the Shanghai update, which started testing in March. With this update, Ether locked in the Beacon chain will be released. This has the effect of increasing the circulating supply of Ethereum.

After the update on the Ethereum network, which will take place next month, assets that make up approximately 14% of the ETH supply will be available on the network. According to the latest data, there are 16 million Ether staked on the Ethereum sidechain for nearly 3 years. These assets, which are worth $25 billion at current prices, will be released gradually with the Shanghai update. This situation brings with it concerns that the assets that will inevitably be released may be seized. However, some factors suggest that these concerns may be unfounded.

Uncertainty about the fate of locked assets on the Ethereum network after the Merge update made investors uneasy. The disappearance of this uncertainty has increased the confidence in the largest staking network of the market. This, in turn, may have an impact on the demand for Ethereum staking activity, which currently has an annual return of 5.45%, after March. The vast majority of investors who currently have assets locked in the network staked their assets while the ETH price was in the $4,000 band. In the current situation, the opinion that investors will not be willing to sell their free assets at the ETH price, which is currently at $ 1,600, also prevails. Eventually, the Ethereum staking service will become liquid, and the assets that will be released may be re-stake in anticipation of a further increase in the asset price. At this point, the increase in demand for platforms providing Ethereum staking services also reveals that investors intend to keep their assets in their portfolios instead of selling them.