Ethereum, the world’s largest altcoin, took a bearish path below the $2,850-pivot level. In fact, ETH even traded below the $2,800 support level amid a broad correction in the market. It traded as low as $2,718 before bulls appeared on the horizon. Soon after, Ether price started a correction and climbed above the $2,750 level.
At press time, ETH, after gaining 2%, was trading at $2.85k. However, that is not all, as ETH has also seen an increase in burning activity.
Very difficult
Ethereum is expected to be deflation by the end of this year. The much anticipated ‘merge’ will reduce the issuance of ETH by 90%, burning more ETH than “printed”. Ethereum has already recorded several days of deflation due to high fees resulting in more burns. After the merger, the net issuance of ETH is expected to range between -1% and -2.5%, mostly depending on the transaction fees of the network.
Speaking of the burning mechanism, here is the latest report card as it continues to set new records.
According to WatchTheBurn, ETH burned over 69,200 ETH today, with a net issue of ETH at -61,600. The two set new single-day historical records since EIP-1559 took effect.
The much-awaited virtual land sale related to Yuga Labs’ Metaverse project went live a few days back. The sale affected a large segment of the entire crypto-market. The huge demand led to an ETH fee of around $200 million. In fact, data from Etherscan shows that users have paid around 64,000 ETH fees in the past 24 hours, which equates to over $175 million.
The volatility above on the graph best represents this phenomenal growth. As of press time, 55,000 ETH had been burned from Otherdeed, the sixth largest burn in history.
Thanks to the EIP-1559, the base fee burned during each transaction continuously reduces the circulating supply of Ether. Since the implementation of the Burn Protocol, the supply of Ether has decreased by 1.6% compared to without the hard fork. This is indicative of a sharp drop in its circulating supply.
Similarly, the supply of ETH on cryptocurrency exchanges has been falling steadily over the past few months. This suggests that the price of the digital asset may see more positive price action in the coming months.
Doubt, Ponzi, and what not
The firm behind the wildly popular bored ape Yacht Club NXT collection, Yug Labs, launched a new land title collection called OtherDid for its Otherside Metaverse. According to Etherscan, the average cost of Ethereum transactions at the time exceeded $400 due to the high demand.
Network fee tracker BitInfoCharts reported that the average fee increased to around $200 on May 1. A certain section of the crowd will certainly be annoyed by the hike in gas charges.
Following this event, ETH users paid an average fee of $4,830 per transaction in a one-hour window. Ergo, ‘Ponzi’-like condemnation surfaced soon after.