04/25/2021
Ether to become a deflationary asset
Both Ether and Bitcoin are decentralized digital currency made use of blockchain.But while Bitcoin aims to replace fiat, Ether is created to be traded as a digital currency and to support the Ethereum network.The Ethereum network enables the deployment of smart contracts and decentralized applications.Some of the popular DeFi applications include Uniswap and MakerDAO, and NFTs that occupied the news headlines in the past month are also part of the Ethereum blockchain.
Now one more point is added to the scoring list of Ether.
One of the points Bitcoin believers used to sell the story is Bitcoin’s limited supply that enables it to hedge against inflation.The supply and demand relationship tells us that in most cases when the supply of an asset is greater than the demand, the price will become lower, otherwise, the price will increase.The increase of Bitcoin’s price encourages people to buy more, thus lowering the supply in the market, which in turn boosts the price.
This is one of the fundamentals of Bitcoin’s price rallies.
In the coming July, the Ethereum Improvement Proposal (EIP) 1559 will be packaged with the London hard fork.In EIP 1559, the “base fee” will fluctuate according to network congestion and is set by wallet providers.You can add a “tip” on top of the base fee as an incentive to miners to get your transaction to be processed more quickly.The base fees will be burned after collection so Ether will become scarcer over time.
Investors are betting on Ether Source: Santiment
Data of Santiment shows the amount of ETH being stored in exchange wallets has been rapidly decreasing and hit a 1-year low.
As the price of ETH continues to go up, we see a significant drop of supply on exchanges, indicating that investors are accelerating to accumulate more ETH and hodl it.Source: Santiment
Meanwhile, although ETH took a dive with other cryptocurrencies, it has bounced back several times and could soon challenge its ATH.Santiment report suggests ETH may be starting to decoupling from BTC and establishes itself as an independent alternative to BTC.
More people are looking into ETH as it is easier to own a whole ETH than a BTC.And while the price of ETH lags behind BTC by a large margin, it is worth noting that BTC has six more years to develop.
Healthy fundamentals and a striving ecosystem Ethereum’s are expected to drive the price of Ethereum higher in the long term.
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Disclaimer: This is a paid post and should not be treated as news/advice.
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