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Why ETH investors could have tough days despite these promising updates

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  • The total annualized issuance rate of ETH reduced substantially 
  • Circulation also decreased, adding to Ethereum’s deflationary nature 

Many speculations were made regarding what would lie ahead for Ethereum [ETH] post the Merge. One of the doubts that most had was around ETH’s deflationary nature. However, there was some clarity seen on that front as according to official sources, ETH achieved a nearly zero total annualized issuance rate.

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Read Ethereum’s [ETH] Price Prediction 2023-24

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Last year, Ethereum developers pushed the London upgrade that enabled the Ethereum burning. The reduced issuance rate, when coupled with the Ethereum burn, added to its deflationary nature and painted a positive picture for Ethereum’s future.

Deflationary characteristics amplified 

As per Messari’s data, ETH’s supply also reduced considerably over the last few days. This further supported its deflationary characteristics. 

Interestingly, while the supply continued to decrease, Ethereum’s number of addresses holding 10+ coins just reached an ATH of 326,899. This development was positive, as it showed the confidence of investors in ETH.

In theory, everything looked to be working in favor of ETH. However, these new updates did not seem to impact ETH’s price, as it was down by over 21% in the last week. At press time, ETH was trading at $1,259.72, with a market capitalization of over $153.5 billion.  

Hold on! This can be concerning for ETH

The king of altcoins’ metrics suggested that things might get even worse for ETH. This was because there was a possibility of a further price decline in the days to come. According to CryptoQuant, the net deposits on exchanges were high compared to the seven-day average, which was a negative sign as it indicated higher selling pressure.

Ethereum’s number of active addresses went down. This suggested a lower number of users on the network. The total number of transactions also followed a similar route, which was yet another bearish signal. Santiment’s chart also supplemented the aforementioned metrics. Though ETH’s Market Value to Realized Value (MVRV) went up over the last week, it was still not adequate. ETH’s exchange outflow also registered a spike, which was a bearish sign too. 

Source: Santiment

Regardless, not everything was against Ethereum, as a few metrics indicated towards a trend reversal. For instance, ETH’s exchange reserve was declining. This was a positive sign indicating lower selling pressure.

Moreover, ETH’s network growth registered a considerable uptick in the last few days, suggesting the possibility of better days in the near future. 

 

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Saman Waris works as a News Editor at AMBCrypto. She has always been fascinated by how the tides of finance and technology shape communities across demographics. Cryptocurrencies are of particular interest to Saman, with much of her writing centered around understanding how ideas like Momentum and Greater Fool theories apply to altcoins, specifically, memecoins. A graduate in history, Saman worked the sports beat before diving into crypto. Prior to joining AMBCrypto 2 years ago, Saman was a News Editor at Sportskeeda. This was preceded by her stint as Editor-in-Chief at EssentiallySports.
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