- 50,000 ethers have been burned in the last five days and the altcoin is heading for a supply shock.
- Traders expect Ethereum 2.0 to compete with Bitcoin for dominance of the cryptocurrency market.
- Experts say Ethereum has better fundamentals than Bitcoin due to deflationary pressures from implementing EIP-1559.
- The key on-chain indicator shows that the upward trend of Ethereum offers little resistance.
Ethereum has surpassed $ 3,400, a significant psychological barrier, and the altcoin has one final resistance barrier at $ 4,078 before climbing to a new all-time high.
Ethereum’s on-chain activity signals that ETH is ready for the second leg of the bull run
The rise in non-fungible token activity has led to an increase in the number of active addresses and the volume of transactions on the Ethereum network.
The NFT sales volume on the largest peer-to-peer marketplace OpenSea has risen to 1.9 billion US dollars since the beginning of August. Most NFTs are rated in Ethereum, and the surge has sparked an increase in transaction fees on the Ethereum network.
Despite rising fees, the implementation of EIP-1559 has so far resulted in the burning of 150,000 ethers, of which 50,000 were burned in the last five days.
Lucas Outumuro, research director at blockchain intelligence company IntoTheBlock, noted that the daily output of Ethereum has fallen below that of Bitcoin for the first time.
1 / For the first time, the daily spending of $ ETH was lower than that of $ BTC
ETH net inflation: 3574 ETH (1.11% annualized)
BTC net inflation: 900 BTC (1.75% annualized)
A quick thread on Ethereum’s recent spike in activity and the potential impact of its falling inflation pic.twitter.com/IBT9Vf3MNo
– Lucas Outumuro (@LucasOutumuro) August 27, 2021
Current Ethereum on-chain activity is at a similar level to the start of the first leg of the Bull Run in April 2021.
Since Ethereum’s last suggestion for improvement (EIP-1559) went live in the London Hard Fork, the daily issue of Ethereum has seen negative developments several times. Traders are now anticipating the “merge,” which is the move from a proof-of-work to a proof-of-stake consensus mechanism.
The “merger” marks a decline in the Ethereum supply, which corresponds to two Bitcoin halves. A sudden drop in supply supports the narrative of a supply shock and a “triple halving” event.
Ethereum has been phased out by burning since EIP-1559 went live. The overall impact of the protocol can be seen as equivalent to a single bitcoin halving. Traders therefore expect Ethereum 2.0 to compete with Bitcoin for market share of cryptocurrencies and replace it.
Bitcoin has enjoyed dominance since its inception and gained popularity due to its first mover advantage. However, analysts expect that the rising relevance, demand and “supply shock” of Ethereum will cause Ether to turn BTC around.
An important indicator, the Global In / Out of the Money (GIOM) diagram, classifies addresses according to whether they are profiting, balanced or losing money at the current price level. GIOM is useful for predicting support and resistance levels for crypto assets.
Ethereum has passed the psychologically important $ 3,400 mark, and the indicator shows that there is little resistance on the way to a new all-time high. The final level of on-chain resistance is at $ 4,078, where over 1.5 million addresses have purchased ethers.
Global in / out of money (Ethereum).
FXStreet analysts have set the next price target for ETH at $ 4,000.