Since the implementation of the proposed EIP-1559, which provides for reducing the overall supply of coin EthereumBillions of ETH have been removed from the market, helping the coin to rally as the massive sale no longer hits the market.
The amount of ETH tokens has exceeded 2.6 million, or regarding $3.7 billion at the current price. If we measure the amount burned by the highest price achieved by ATH, the value will be even higher, around $12 billion.
More importantly, Ethereum’s annual inflation rate has fallen by more than 50% which has driven ETH into deflation, which means that the coin’s issuance will fall below the burn rate.
With the integration update, the total Ethereum issuance will drop by 90%, driving network inflation to a very low level. As issuance decreases and adoption grows, the demand for Ethereum will drive its price up more effectively.
Will Burning Ethereum Help Raise Its Price?
It is clear that reducing the supply cannot, and will not be the only fuel for the rise in the price of Ethereum. Decentralized applications and solutions are the main sources of ETH’s incremental value, which means that deflation without use cases will not change its price.
As we can now see, the influx of funds from the cryptocurrency market, and the blockchain industry in general caused the ETH price correction of almost 80%. The massive correction was linked to outflows from the DeFi and non-fungible tokens (NFT) industries – the main sources of revenue for the Ethereum network.
Extremely low network fees are also proof that the network is not being used. The situation is expected to change with the gradual recovery of the cryptocurrency market, which will not happen until monetary policies around the world recede.
Source: U.TODAY
