Ethereum’s circulating supply is at a record low since the Merge – around 120.5 million tokens. The Merge is one of the most significant technical modifications in Ethereum network history. It converted the network from proof-of-work to proof-of-stake and significantly reduced Ether net issuance.
The declining supply of Ether is due to the growing price of Bitcoin and rising equity markets. Traders tend to purchase higher-risk tokens that can only be acquired on-chain when they observe market trends. This influx in demand for the network causes an increase in Ether burned per transaction, further decreasing its available supply.
Since the start of 2023, Ethereum’s overall transaction costs have been steadily climbing and even temporarily reached those seen during Q3 2021, when both Bitcoin and Ether prices were much higher.
According to Dune Analytics, NFT activities on Ethereum have recently experienced a slight resurgence. While it is nowhere near the level of 2021, when its volume set an all-time high, this is promising evidence that on-chain activities are once again increasing.
The circulation of ether tokens plays an essential role in many analysts’ and traders’ assessments of ETH price since fewer circulating tokens imply better pricing prospects.
