Ethereum's Available Supply Is Shrinking: Will It Help Bulls Push ETH Above $2000
Date: 2023-07-06 Author: Karina Ziganova Categories: BLOCKCHAIN
Last week, Ethereum (ETH) made another attempt to overcome the $2000 level. The readings of key on-chain metrics indicate that the bulls need to gather strength before the next breakthrough.
The number of ETH locked in smart contracts continues to grow. However, the reduction in the number of coins available on exchanges has not yet led to a significant jump in the price of the asset.
Ethereum's staking activity is at an all-time high
According to Glassnode, the number of ETH locked in smart contracts continues to break one record after another. The chart below shows that between June 1 and July 4, users locked another 1 million coins in staking. Thus, at the moment, approximately 30.6% of the circulating supply of Ethereum was unavailable for trading.
If the number of coins available on exchanges continues to decline, the high demand of investors for ETH may push its price to around $2000 and above.
The rate of ETH burning has significantly decreased
Another important factor influencing the volume of Ethereum's net supply is the combustion rate. This is the percentage of existing coins that are burned and withdrawn from supply.
The surge in traders' interest in ERC-20 memecoins led to a surge in the rate of burning: at the peak, about 14,600 ETH were burned. However, since then, the number of tokens burned has decreased by 80% to 3060.
As you can see in the Santiment chart above, the indicator is positively correlated with the price. This means that the increase in the rate of Ethereum burning will affect the asset's quotes and help the bulls launch a new rally.
The price of Ethereum may drop to $1800
According to IntoTheBlock's Global In/Out Money metric, the price of ETH is likely to fall below the $1800 level again before making another attempt to reach the $2000 mark.
However, 6.27 million addresses that purchased 13.41 million coins at an average price of $1850 may hinder the decline
In case of consolidation above $2000, the bulls will have every chance to maintain control over the situation. However, the resistance of 7.3 wallets that bought 33 million Ethereum at a minimum price of $1987 could be a problem.
