After dropping 6,000 ETH in a week, the price of Ethereum is anticipated to increase by 35%.
Ether, the native cryptocurrency of Ethereum (ETH tickers down $1,310), appears poised for a significant rally as a result of a combination of analytical and fundamental factors. Technically, the price of ETH is anticipating a 35% increase by the end of October after staying at a crucial support level.
6K ETH less are available in ether. Ether’s positive technical picture is further influenced by the recent supply shortage.
Since October 8, the supply of ether has decreased by over 6,000 ETH, or about $7.9 million. That represents the first deflationary action taken by the Ethereum network since switching from proof-of-work (PoW) to proof-of-stake (PoS) via the Merge 1 month ago, where more ETH is getting destroyed than created.
For validators to confirm users’ on-chain Ethereum transactions, users must pay so-called gas costs. In the past, more users on the Ethereum network meant higher gas prices and more money for validators. However, a portion of the gas fee is withdrawn completely from Ether circulation after the August 2021 EIP-1559 release. Simply stated, when demand is high, more ETH is burned.
After October 8, the same thing began to occur. Evidence suggests that a new cryptocurrency project called XEN Crypto is boosting network traffic. 4,490 ETH tokens have been burned during the past seven days compared to 16,690.52 ETH tokens, thanks to XEN Crypto.
Over the weekend, XEN Crypto launched with no supply. However, there was no cost to mint it; all users had to pay were ETH gas fees. In other words, a new initiative, which presently accounts for more than 40% of all Ethereum transactions, makes Ether deflationary for the first time since Merge.
The long-term outlook for ETH pricing is negative. However, due to ongoing macro-warnings brought on by the United States Federal Reserve’s interest rate increases to high inflation, Ethereum’s long-term outlook leans unfavorably. Ether’s persistently positive connection with American stocks means it is still vulnerable to these concerns.