In a recent milestone achievement for the Ethereum network, almost 30,000 ETH have been destroyed through the burning mechanism since the implementation of the Merge update. The recent spike in burn rate is a promising development, indicating that the transition to the new consensus mechanism is progressing smoothly.
What's more, the new burning mechanism is functioning as intended, signaling that Ethereum is heading toward a more sustainable future. The burn rate has been climbing higher due to the increased network activity, making this progress all the more remarkable.
The timing is particularly significant as the Shanghai upgrade is on the horizon, which would allow ETH stakers access to withdraw funds.
Speaking of the upgrades…
Ethereum Supply on Exchanges on the Decline: Santiment
According to on-chain data from Santiment, the Ethereum market has seen a positive trend since September 2022. The cryptocurrency’s supply on exchanges has dropped by 37% since the successful transition of the network consensus mechanism to a proof-of-stake (PoS) one.
The “supply on exchanges” metric measures the total amount of Ethereum sitting in centralized exchange wallets. When this metric increases, it may indicate that investors are transferring coins to exchanges, which could have a bearish impact on the asset's price if they are deposited to be sold. However, when the indicator declines, it suggests that a net amount of supply is leaving exchanges, which can be a bullish sign for the coin.
Santiment reports that on the date of the Merge, September 14, 2022, the Ethereum supply on exchanges was around 19.12 million ETH. Since then, the indicator has experienced a significant decline, with only 13.36 million ETH remaining on exchanges today. The current exchange supply is worth about 37% less than it was during the Merge, indicating a decrease in capital loss.
The available selling supply has continuously shrunk in recent months, with these platforms holding about 30% less Ethereum supply than on the date of the PoS upgrade. Santiment believes that this is good news for the Ethereum market, as a decrease in selling supply can naturally be bullish for the coin.
This trend is particularly significant as Ethereum is one of the largest cryptocurrencies by market capitalization, and a decrease in supply on exchanges can indicate a positive outlook for the coin. As investors continue to transfer coins out of exchanges, it suggests that they are either holding onto their Ethereum or moving them to other wallets, potentially for long-term holding.
Overall, the drop in Ethereum supply on exchanges is a positive sign for the cryptocurrency market. With an increase in demand and a decrease in available selling supply, the outlook for Ethereum appears to be bullish in the coming months.
Ethereum’s Network Activities Lagging
Finally, despite recording increasing network activities, Ethereum continues to lag behind other industry competitors in that field. On February 19, reports showed that the Ethereum network came in seventh place in weekly development activity commits on GitHub, with 361 commits. Polkadot/Kusama, Cardano, and Internet Computer topped the week’s rankings with 599, 523, and 434 commits, respectively.
Regardless, ETH traders remain optimistic about the near-term prospects of the cryptocurrency as market sentiment for Ethereum remains in “extreme greed” (61) as of February 19.
ETH Price Action
On the price front, Ethereum has just breached a significant resistance mark as trading sentiment remains upbeat. The cryptocurrency has scaled the $1,674 level for the first time since early November 2022, a few days before the devastating bearish blow witnessed across the market that month.
The next targets for ETH now are the $1,800 resistance and the $2,000 round figure. A breach of these levels, especially the $2,000 mark, could confirm the end of the bearish cycle.
ETH Statistics Data
ETH Current Price: $1,704
ETH Market Cap: $208.5B
ETH Circulating Supply: 122.3M
ETH Total Supply: 122.3M
ETH Market Ranking: #2
This article should not be taken as financial advice. It is essential to conduct research before making any investment decisions.