One step closer to deflation, but price remains unfazed
After the implementation of the merge update and increased network activity, the price of Ethereum dropped by more than 98%. Under the PoW mechanism, over the same period, the market would have more than $500 million worth of ETH.
Since implementation of the major update, only 6,500 ETH has been issued on the network. At the current price level, it is worth around $8.5 million. Such a low inflow to an asset with almost $10 billion in volume technically makes fresh selling volume nonexistent on the market.
According to Ultrasound.money ethereum tracking service, after the merge update the network passed its issuance peak and will gradually deflate as the issuance turns negative, with most of the coins burning rather than being distributed among miners. will be given.
Deflation is not a panacea
Deflationary periods for Ethereum investors are not something they have not seen before. Negative issuance has been the case for ETH many times, especially during the blossoming of NFT and DeFi industries, when the network’s load was close to 100%.
However, the paucity of new coins in the market is not something that substantially alters the performance of the second largest cryptocurrency in the market. Network usage and revenue seem to be the only factors that could be causing strong rallies in the market, at least at this point.
The prolonged deflation may have a positive effect on the value of Ethereum on the market, but in order to capitalize on it, developers would need to offer users something that would attract new investments to the decentralized industry.
At press time, Ethereum is trading at $1,327 and is moving in a consolidation channel.
