Cointime

Cointime

Download App
iOS & Android

Why Is Ethereum Turning Deflationary?

Validated Individual Expert

Why do goldbugs bet on gold when compared to other asset classes? The basic reason is the process associated with mining which makes it extremely less inflationary when compared to other asset classes. Hence gold’s price fluctuates paradoxically time and again. But gold does face some challenges like it could be easily confiscated and one has to find it difficult to move from one location to another.

There’s another nobel asset that mimics gold but with an upside, it can be easily moved. We are talking about Bitcoin. It has the same characteristics but mining process of Bitcoin involves using ASICS, which means a lot of investment comes into play.

What if there’s something which equals Bitcoin having deflationary traits and it is poised to host the next big financial infrastructure. Wouldn’t that be satisfying from an investment standpoint?

Ethereum, the programmable money is turning deflationary after The Merge and it is going to impact how people invest and use Ethereum in the near future.

Why is Ethereum Turning Deflationary?

In August 2021, EIP 1559 was rolled out which resulted in burning a part of the transaction fees awarded to the miners. Due to this upgrade, after the current locking of the tokens due to The Merge event, the amount of ETH in circulation has been lesser than the actual demand for ETH. As a result, ETH is turning deflationary for the first time. 2.8 million ETHs have been burned so far which has amounted to $4.6 billion.

Since ETH and Bitcoin will be neck to neck in terms of generating real-time value and cost of mining ETH is far lesser than Bitcoin, it might push a lot of miners to invest in turning validators and getting ETH as rewards when compared to Bitcoin.

Will It Be Good for investment?

From the perspective of an investor, it is going to be a good thing since ETH will replicate what Bitcoin has done so far but with additional trade-offs. For example, Bitcoin has turned into an inflation hedge. With ETH’s shrunk supply and high demand, ETH could maintain the same momentum like Bitcoin and future anticipated DeFi,NFTs and Metaverse development on top of Ethereum would further push demand for ETH, undoubtedly establishing the narrative of “ETH to the Moon.” However we have to wait and watch how things start to shape up when all the locked ETHs will come into circulation post the Shanghai Event slated for March 2023.

Ethereum Ethereum $2,022.35
+0.55%
Ethereum Cryptocurrency
Comments

All Comments

Recommended for you

  • BTC Surpasses $74,000

    Market data shows that BTC has surpassed $74,000, currently priced at $74,011.04, with a 24-hour decline of 0.35%. The market is experiencing significant volatility, so please ensure proper risk management.

  • First Windows PCs with NVIDIA Chips Expected to Debut Next Week

    On May 30, Axios reported that sources indicate NVIDIA is set to enter the personal computer market, with the first Windows PCs featuring its chips as the main processors expected to be unveiled next week. NVIDIA and Microsoft will showcase their collaborative results and the initial PCs equipped with these chips at two major industry events: Computex in Taipei and the Microsoft Build Developer Conference. Sources suggest that PCs with NVIDIA chips are likely to appear in Microsoft's Surface brand as well as products from other manufacturers, including Dell. Microsoft is also expected to launch software that will allow users to more easily run AI agents locally on Windows PCs.

  • This Week, US Spot Bitcoin ETFs Experience Net Outflows of $1.4156 Billion

    On May 30, according to Farside monitoring, US spot Bitcoin ETFs experienced cumulative net outflows of $1.4156 billion this week. This includes: IBIT with net outflows of $966.3 million; GBTC with net outflows of $172 million; FBTC with net outflows of $169.1 million; BITB with net outflows of $46.3 million; ARKB with net outflows of $24.7 million; MSBT with net outflows of $1 million; and Grayscale BTC with net outflows of $33 million.

  • US Oil Giant Predicts Higher Oil Prices This Summer

    On May 30, according to CCTV Finance, during a conference hosted by investment firm Bernstein, Chevron CEO Mike Wirth stated that due to the situation in Iran, global crude oil inventories are continuously declining, and oil prices are likely to rise in the next two months. The Financial Times reported that Wirth's remarks reflect widespread concerns: even if the conflicting parties reach a ceasefire agreement, the negative impact of the conflict on energy prices will persist for months. Additionally, CNN reported on the 28th that due to the ongoing geopolitical conflicts in the Middle East, the U.S. Strategic Petroleum Reserve is declining at a rare pace not seen in recent years, and commercial crude oil inventories are also at low levels.

  • S&P 500 Index Set for Rare Nine-Week Winning Streak

    On May 29, hopes that a ceasefire agreement could bring an end to the Middle East conflict have propelled the U.S. stock market towards a rare weekly winning streak record, with a surge in artificial intelligence trading also boosting the market. The S&P 500 index has rebounded nearly 20% from the lows triggered by the war and is poised for its ninth consecutive week of gains, marking the longest winning streak since December 2023. Such a rare occurrence has only happened a few times since 1985. On Friday, the index edged higher, hovering near record highs.

  • Grayscale to Introduce $115 Million HYPE Token Seed Funding for Hyperliquid Staking ETF

    On May 29, Finance Feeds reported that Grayscale is in talks with Hyper Holdings Global LP to sell shares of its proposed Hyperliquid ETF in exchange for approximately 2 million HYPE tokens, valued at about $115 million at current prices, to serve as seed capital before the fund's listing. At the same time, Grayscale has renamed the product to 'Grayscale Hyperliquid Staking ETF', which is set to be listed on NASDAQ under the ticker HYPG. The new staking feature distinguishes it from a traditional spot ETF that solely tracks token prices.

  • BTC Falls Below $73,000

    Market data shows that BTC has fallen below $73,000, currently priced at $72,999.33, with a 24-hour decline of 0.4%. The market is experiencing significant volatility, so please ensure proper risk management.

  • Spot Gold Reaches $4,550/oz, Up 1.20% for the Day

    Spot gold has reached $4,550 per ounce, rising 1.20% for the day.

  • S&P 500 Technology Sector Hits Record High, Up 1.7%

    On May 29, it was reported that the S&P 500 technology sector has reached a historic high, currently up 1.7%.

  • U.S. Stock Indices Open Slightly Higher; Dell Rises Over 30%

    On May 29, U.S. stocks opened with the three major indices slightly higher, with the Dow Jones up 0.18%, the S&P 500 up 0.09%, and the Nasdaq up 0.16%. Dell (DELL.N) surged over 30% as its first-quarter earnings exceeded expectations. Stocks of AI server manufacturers also rose, with Super Micro Computer (SMCI.O) up over 7% and HP (HPQ.N) up over 6%.

Daily Must-Read

Popular Activities

RaveDAO at Terra Solis by Tomorrowland: A Female-Led Techno Night Where Web3 Culture Converges

RaveDAO at Terra Solis by Tomorrowland: A Female-Led Techno Night Where Web3 Culture Converges

April 30 - April 30
Dubai

Popular Tags

Cointime
News
Contents
RSS
Company