Ethereum Records First Deflationary Day! Can Depleting Supply Push $ETH to ATH

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Ether ($ETH), the second-largest cryptocurrency managed to breach $4K resistance briefly for the first time since posting ATH of $4,362 in May. However, it could hold onto its gains that fell right after, currently trading at $3,934. The altcoin started its path to recovery along with Bitcoin starting in August and gained momentum post-London Hardfork.

Source: TradingView

London Hardfork proved to be the catalyst for Ether’s price as EIP-1559 made it a deflationary asset. Since then nearly hundreds of millions worth of $ETH has been burnt out of circulating supply. Ether had its first deflationary day as the number of $ETH burnt was higher than the day’s supply. A total of 13,485.5000 ETH were issued while 13,838.3717 were burnt.

The depleting circulating supply could trigger the supply-demand crisis fueling the Ether price to new highs. A significant portion of the depleting circulation supply was already being staked in ETH 2.0 contracts and the burning tokens have made it even scarcer.

Ether Exchange Supply on a Continuous Decline

The volume of $ETH on centralized exchanges has fallen to a new two-year high. Since March 15, 2020, the exchange supply has dropped from 27% to 17%. Price is up 3,447%. The altcoin is riding high on the surging popularity of NFTs as well which makes use of Ethereum’s smart contract and acts as a base blockchain for the same.

Ether
Source: Santiment

Ether is only 9.88% below its previous ATH and if the current bullish momentum continues, the second-largest cryptocurrency can post a new ATH in the coming weeks itself. Many believe it will outperform Bitcoin in the second leg of this bull run because of the great market depth and the surging popularity of Defi and the NFT ecosystem.

With ETH 2.0 final upgrade nearing and a successful London hard fork has put Ether in the driver seat and it might be the next altcoin to join the likes of Solana ($SOL), Terra ($LUNA), and Cardano ($ADA) to post new ATH.

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