Welcome to Extreme Investor Network, where we provide unique and valuable insights into the world of investing. Today, we’re discussing the latest developments in the cryptocurrency market, specifically focusing on Ethereum.
While many investors were hopeful that ether would become increasingly scarce, recent data from CryptoQuant suggests otherwise. The supply of ether is actually growing at its fastest rate since 2022, contradicting the idea that it would become more scarce over time.
One of the reasons for this increase in supply is the recent technical upgrade called Dencun, which took place in March. This upgrade led to lower transaction fees on the Ethereum network, making it more cost-effective for users. As a result, the amount of burned ETH has decreased, causing the supply of ether to grow at a rapid pace.
Julio Moreno, head of research at CryptoQuant, explained, “[Some] investors were thinking to get exposure to Ethereum based on the thesis that it was getting more scarce, there was less supply. After this, this thesis is not valid anymore.”
Despite the growing supply of ether, the narrative surrounding Ethereum as a scalable transaction network remains strong. The Dencun upgrade has made Ethereum cheaper and more scalable, solidifying its position as a key player in the crypto space.
Looking ahead, Moreno believes that reversing the trend of enhanced supply will be challenging, as network activity remains strong despite the decrease in burned fees. In order to shift this growing supply trend, network activity would need to increase significantly.
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