Ethereum Records Rare Deflationary Streak as Network Activity Booms
Ethereum (ETH), the second-largest cryptocurrency in the market, has recently made headlines for its prolonged deflationary mode, a rare phenomenon in the cryptocurrency world. This deflationary trend, which lasted for over 48 hours, is believed to be a result of a series of launches on the network, causing a spike in activity.
According to popular crypto analyst Colin Blockchain Wu's tweet last week, the cryptocurrency fear and greed index has remained around 60 for several days, and the amount of Ethereum burned reached 3040 on February 2, the highest level since November 10, 2022. The primary sources of this burn are Uniswap and OpenSea.
In August 2022, Ethereum implemented the Ethereum Improvement Proposal (EIP) 1559, which aimed to create a mechanism that would burn a portion of user fees. This proposal linked network utilization with the amount of Ether burned, thereby making the network deflationary in nature.
On-Chain Metrics Contributing to Ethereum's Network Activity
There are several other events taking place on the Ethereum network that could contribute to further activity, including the looming launches of the Arbitrum and MATIC zkEVM, as well as the BLUR and SUDO token drops. Despite these developments, the cryptocurrency market remains highly volatile, as seen two months ago when Ethereum lost a significant part of its network activity and became inflationary, causing concerns among investors.
In recent weeks, the price of Ethereum has been steadily rising, but the market has shown signs of reversal, such as low trading volume and decreasing volatility. Despite these indicators, it is important for investors to adopt a long-term perspective and consider potential market recovery, as well as the ongoing launches on the Ethereum network.
Ethereum Developers Ready for Two Forks on the Zheijang Testnet
In other news, Ethereum’s core development team recently announced the launch of two forks, the Shanghai and Capella forks, on the Zheijang testnet on February 7, 2023. These forks, collectively referred to as "Shapella," will upgrade the Ethereum execution layer and the network’s Beacon Chain consensus layer, respectively. The Shapella launch will occur on Tuesday, February 7, at epoch 1350, with the Sepolia and Goerli testnets set to follow soon after.
In conclusion, Ethereum's prolonged deflationary trend is a unique event in the cryptocurrency world, and its impact on the price of ETH remains to be seen. While the market has shown some signs of reversal, investors need to adopt a long-term perspective, considering the potential for market recovery and the ongoing launches on the Ethereum network.
Ethereum on Correction Bid
After tapping the $1,700 mark for the first time since early September 2022, Ethereum appears to be on a correction course as it returns to the $1,600 mark. This correction comes as the broader market loses bullish momentum and volatility over the weekend.
The popular altcoin is not expected to stray far away from the $1,600 region in its correction bid and could resume an upward trend this week.
In the meantime, ETH traders will keep an eye on emerging on-chain developments and how they influence the price of the cryptocurrency.
ETH Statistics Data
ETH Current Price: $1,615
ETH Market Cap: $197.3B
ETH Circulating Supply: 122.3M
ETH Total Supply: 122.3M
ETH Market Ranking: #2
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Disclaimer
This article should not be taken as financial advice. It is essential to conduct research before making any investment decisions.