The price activity of Ethereum is reducing the supply of the crypto to the lowest levels recorded since August 2022. Furthermore, the decline in ether supply has marked its fastest decrease since May 2023.
At the same time, several on-chain metrics are approaching or even reaching new twelve-month highs. Let’s see all the details below.
Summary
The rapid decline in Ethereum supply and price trends
As we know, the latest Dencun update of Ethereum was implemented on March 13th.
However, it was the previous major update that significantly impacted the total availability of ether.
Mid last week, the total amount of ether dropped to the lowest level recorded since August 2022, as indicated by data provided by CryptoQuant and reported by CNBC.
It is precisely during that period that Ethereum introduced its most significant upgrade to date, moving from proof-of-work to proof-of-stake, known as The Merge.
Furthermore, the rate of decrease in the supply of ether is currently the fastest since the beginning of May 2023.
In the recent 30 days, the supply of ether has decreased at an annual rate of 0.872%, according to data from ultrasound.money. For comparison, since the Merge itself, the rate of decrease has been 0.246%.
Julio Moreno, head of research at CryptoQuant, highlighted that the high activity on the Ethereum network has led to high transaction costs and, consequently, to a greater amount of ether being burned.
In concrete terms, over 1.56 million ether have been burned by the Merge, while less than 1.12 million ether have been issued.
This has caused a sharp decrease of over 446,000 ether, equivalent to almost 1.62 billion dollars at current prices.
Activity record and on-chain transparency
Although the focus is mainly on activity on the Solana network, the Ethereum ecosystem continues to show distinctive signs of vitality.
A seven-day moving average of transactions on Ethereum is approaching its annual peak recorded in January, with 1.26 million transactions recorded just yesterday, according to recent data.
Julio Moreno highlighted that “total daily transactions are at record levels, not seen since May 2023”, pointing out an increase in network fees, an increase in burned fees, and a reduction in the total supply of ether.
At the same time, the number of active addresses on Ethereum is at its highest since the beginning of the year and for the past 12 months, with approximately 540,000 active addresses registered just yesterday.
Furthermore, the number of new addresses on the Ethereum network is also at its highest since the beginning of the year and for the past 12 months, with more than 120,000 new Ethereum addresses.
Finally, the on-chain volume of Ethereum has reached new highs since the beginning of the year and for the past 12 months, with over $7 billion in volume recorded just yesterday, according to data from The Block.
Bearish correction for Ethereum: potential recovery towards $4,000?
The price of Ethereum has started a correction lower below $3,650, but is currently attempting a decent recovery wave in the short term.
The correction of Ethereum has crossed the levels of $3,800 and $3,700, following Bitcoin, and then dropped below the key support at $3,650, entering a temporary bearish phase.
The price has even exceeded the critical threshold of $3,500, touching a minimum of 3,414 dollars, but now shows signs of recovery. Ether has recovered above 3,500 dollars and the Fibonacci retracement of 23.6% from its high to low.
Currently, the price of Ethereum is below $3,700 and the 100-hour simple moving average, with immediate resistance around $3,650 and a clear downtrend line at $3,660.
Future prospects indicate a possible recovery towards $3,750 or a 50% Fibonacci retracement at $3,830, beyond which it could gain momentum towards $3,925 and, eventually, $4,000.
