Ethereum has shown a contractionary performance in the last month, with a net supply decrease of 10,145.72 ethers (worth approximately $16 million).
According to Valx and quoted by Bein Crypto, the contraction of a currency (compared to inflation) can have pleasant consequences for its value. A decrease in supply under constant or increasing demand conditions will cause the value of an asset to grow.
Contraction of Ethereum means that the total supply of Ethereum decreases. This happens when the amount of Ethereum removed from circulation – through processes such as token burning – exceeds the amount of tokens that are paid to validators as a validation reward and to secure the network.
According to data from Ultrasound Money, the net supply decrease of 10,145 Ethereum in January is a continuation of a trend that has been going on for some time. The current annual supply growth rate of the Ethereum network is negative 0.24%.
This issue has attracted the attention of experts and investors. Some believe that the decrease in Ethereum supply could be a sign of increased demand for the digital currency as investors want a bigger share of Ethereum’s melting pie.
Others believe that this trend may be caused by other factors such as the increase in the number of long-term holders of ether. The total current total supply of the Ethereum network is 120515722 Ether (ETH).
The current value of Ethereum shows a drop of 67.5% compared to the peak price of Ethereum. Some experts believe that with the upcoming update of “Shanghai” and the release of tokens locked in the staking smart contract, the selling pressure of this asset will increase and we will see the price of ether decrease.
Despite these issues, Ethereum analysis from a technical point of view shows the progress of this network. The rate of trial implementation of new features on test networks has increased. The proof of this is the launch of the first blockchain browser for the testnet of the harvesting process.
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