This was one of the most significant changes to Ethereum’s economy after The Merge update in September 2022.
Today, the overall circulating supply of Ethereum hit a post-Merge low of about 120,500,000 tokens. The Merge, one of the largest technology upgrades in the history of the network that drastically altered its economics, shifted Ethereum from proof-of-work to proof-of-stake and reduced the total net issuance of ether.
The decreasing supply may be related to the rising price of Bitcoin and rising equity markets, as traders frequently respond by purchasing on-chain tokens with greater risk. Demand for the network, or the number of users attempting to create new transactions, causes the average amount of ether burned per transaction to increase, thereby decreasing supply.
Since the beginning of 2023, the total cost of all Ethereum transactions has risen steadily. It temporarily reached the third-quarter 2021 levels, when bitcoin and ether prices were much higher.
According to Dune Analytics, there has also been a minor uptick in NFT activity on Ethereum. This activity is not as great as it was in 2021 when volume reached an all-time high, but it is another sign that on-chain activity is returning.
The circulating supply of ether is an important fundamental variable that many analysts and traders consider when analysing the price of ether, with the rationale that fewer tokens in circulation are beneficial for the price.
Also Read: Bitcoin Miners Might Stop Selling In The Near Future, Causing Prices To Increase
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