The Amount of Ethereum Mined on a Daily Basis is Decreasing. Will It Be A Bullish Signal?
Ethereum (ETH) has been trading in the red for the past week, but a potential bullish turn could be on the way soon, as evidenced by a recent drop in the ratio of Ethereum mined each day versus its burn rate. According to a chart shared on April 7 by crypto analytics platform IntoTheBlock, Ethereum’s 7-days average net issuance has been around 2.21 %, after peaking at 3.48 % on March 12.
A low daily net issuance of Ethereum, or a declining difference between its daily mine and burn rate, indicates that its supply is being restricted. As a result, the asset’s decreased supply increases its demand, and increasing demand usually drives up the price. This is exactly what happened during the week of January 10th, when Ethereum had constant negative net issuance. As a result, the price increased by up to 10%. Despite the market’s later decline, its week-long uptrend was notable.
ETH hasn’t experienced a negative net issuance day since then, but it did hit a two-month low of 0.87 % on April 5, signalling a likely price hike. If this ratio falls below 0, Ethereum will enter deflation.
Despite recent bearish changes, ETH is still trading 24.21% higher than a month ago, according to CoinMarketCap data. It has seen large withdrawals from multiple crypto exchanges, reducing the token’s available supply and driving up demand. Besides that, the network is experiencing increased demand due to the widely anticipated ‘The Merge’ – a network upgrade that will officially mark Ethereum’s transition from the Proof-of-Work (PoW) to the Proof-of-Stake (PoS) consensus.
At the time of writing, the price of ETH was $3,227, down 1.30 % in the previous 24 hours and 4.88 % in the previous seven days. The market capitalization of the second-largest crypto-asset according to this indicator is currently $387.86 billion.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
Join CoinCu Telegram to keep track of news: https://t.me/coincunews