Ethereum Losing Momentum: When Is Recovery Possible?
Date: 2025-05-13 Author: Henry Casey Categories: CRYPTO PAYMENTS
Analysts at the CryptoQuant platform have drawn attention to an alarming trend — the volume of Ethereum’s circulating supply has exceeded 120.7 million coins, which is a new record. This trend indicates a departure from the previous deflationary scenario, which many had hoped for after the activation of the token burning mechanism in previous years.
Experts explain this by the consequences of the recent Dencun update, which significantly reduced transaction fees on the network. Thanks to this, the burning of Ether has almost stopped, which immediately affected the supply volume — it began to grow. Experts believe that this is not a temporary failure, but a long-term structural change in Ethereum’s monetary policy.
They emphasize that the reduction in fees played a dual role: on the one hand, it made the network more accessible, but on the other hand, it removed the key mechanism for reducing supply, thereby weakening inflation control. In this regard, as noted by CryptoQuant, one should not expect a return to reducing emissions in the near future.
As for network activity, analysts emphasize the lack of significant growth. The number of transactions and active addresses has remained at approximately the same level since 2021, with no signs of rapid growth.
An additional alarming trend was the reduction in the volume of funds locked in staking. This indicates a decrease in confidence on the part of both private investors and institutional players. According to analysts, the decline in interest in staking is directly related to the general uncertainty surrounding the future price dynamics of the asset.
Santiment analysts previously noted that the average transaction fee on the Ethereum network dropped to $0.168 - this is the minimum value since May 2020. While such indicators could indicate an increase in network availability, in this case they became one of the factors that led to the deterioration of the Ethereum monetary model.
Thus, for the Ethereum rate to begin a confident recovery, either a revision of the current monetary policy model or a sharp increase in user activity on the network will be required. In the meantime, according to experts, there are no prerequisites for a rapid increase in the value of the asset.
