The recent market dynamics have brought again Ethereum Supply in the spotlight and reiterated concerns about its inflationary trend. Earlier this year, Ethereum reached a significant milestone in its circulating supply, surpassing 120 million ETH, and that number continues to grow.
Unlike other well-known cryptocurrencies like Bitcoin and Cardano, which have fixed supply limits, Ethereum was designed with an unlimited supply of tokens. This fundamental difference makes Ethereum inflationary by naturet, the supply of which is constantly increasing.
On the chain data from Ultrasound.money shed airy on the growing supply of ETH in recent months significant price fluctuations for the cryptocurrency. The latest data indicates that the total supply of Ethereum has now reached approximately 120.28 million ETH.
In the last seven days alone, 16,039 up-to-date ETH tokens have been issued. This rate of issuance corresponds to an annual inflation rate of 0.70%. Interestingly, this data shows that in the last four months since the Dencan update in March, 243,886 ETH have been created.
What does this mean for Ethereum?
Ethereum’s inflationary mechanism is mostly neutralized by token burning. This burn mechanism was introduced as part of Ethereum’s London Hard Fork to introduce a deflationary mechanism to Ethereum. This mechanism aims to reduce the overall supply of ETH by burning a portion of transaction fees, thus introducing a deflationary counterweight.
However, data from Ultrasound.money shows that burn is currently lagging behind issuance, with Ethereum currently on an inflationary trajectory. Notably, 2,028 ETH was burned in the past seven days, compared to 18,075 ETH issued in the same period. Such a continued upward trend in supply growth could put downward pressure on the ETH price if demand falls.
At the time of writing, Ethereum is trading at $2,615 with no significant gains or losses in the 24-hour period. Looking at the broader seven-day price action, Ethereum has largely traded in a range of $2,750 on the high end and $2,530 on the low end. Recent price action has seen Ethereum rebounding around $2,540 in the last 12 hours. If this continues, Ethereum could possibly raise and retest $2,750 in the next few hours.
According to the latest data from Greeks.live, around 184,000 ETH options set to expire today. These options represent a significant notional value of $470 million and feature a put-call ratio of 0.8 and a maximum pain point of $2,650. This high put-call ratio indicates that market participants are currently buying more put options than calls, which in turn suggests bearish sentiment.
The image in the photo is from Dall-E, the chart is from Tradingview.com
