Ethereum's Price Decline Continues as Supply Plummets to 18-Month Low

Ethereum's Price Decline Continues as Supply Plummets to 18-Month Low

By: Isha Das

Ethereum (ETH) is once again under pressure as it struggles to stay above the $2,250 support zone, raising concerns for more possible downsides. Ethereum has been finding it difficult to initiate a fresh increase above the $2,250 resistance, suffering a sustained dip below $2,250 and the 100-hourly Simple Moving Average. A key declining channel is being formed with resistance near $2,225 on the hourly chart of ETH, indicating possible downward movement if it declines beyond the $2,120 support zone.

In addition to the price concerns, the supply of Ethereum continues to dwindle. Recent financial data shows Ethereum's supply at an 18-month low, standing at the 120,211,380 ETH mark. This reflects a deflationary trend, where new Ethereum tokens are not being created. A total of 1,195,238 ETHs, valued at around $2.65 billion, have been permanently removed. This enhances Ethereum's scarcity and could potentially up its value over time. Despite the issuance of 885,581 ETH, Ethereum's total supply experienced a net decrease, showing that the rate of Ethereum burning surpasses the rate of new issuance.

Financial trends have shown a steady decline in Ethereum supply since the historic merge in September 2022. In the DeFi sector, contracts contributing to ETH burning include major dApps and services such as Uniswap, Tether, and OpenSea. Tether's substantial stablecoin transactions on Ethereum's network, while OpenSea's inclusion reflects the resilience of NFT transactions even through bearish market conditions.

Going forward, Ethereum's deflationary tendencies could lead to increased demand and potentially higher ETH prices provided demand is steady or increasing post the bear market. However, the current bearish trend coupled with the dwindling supply of the cryptocurrency presents an uncertain future trend.

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