Ethereum has been on a rally for the past week, moving from a two-month low at $1,700 to its current level at $3,223. Several factors have pushed the crypto market into a new rally, but most seem to gravitate around ETH and its ecosystem.
ETH moves sideways into the weekend on the 24-hour chart. Source: ETHUSD TradingviewAfter the implementation of EIP-1559, Ethereum’s native token became a deflationary asset due to the change in its fee mechanism. To validate transactions on the network a portion of ETH is “burn”, meaning send to an address that no one can access.
As a consequence, ETH has been gaining traction as a store of value asset, for some experts, even more, efficient than Bitcoin. Researcher Lucas Outumuro has recorded a dropped in ETH’s daily issuance, lower than Bitcoin’s for the first time since its inception.
5 BTC + 300 Free Spins for new players & 15 BTC + 35.000 Free Spins every month, only at mBitcasino. Play Now!As the chart below shows, ETH net inflation stands at 3574 ETH (1.11% annualized), and BTC net inflation stands at 900 BTC (1.75% annualized), Outumuro claimed.
Source: IntoTheBlockThe decline in ETH’s daily issuance is attributed to the increase in on-chain activity. The research tracked this down to the surge in the non-fungible token (NFT) related activity.
By 2021, NFTs have become a new mania in the crypto industry with a seemingly high level of adoption from the mainstream.
Get 110 USDT Futures Bonus for FREE!A couple of days ago, payment giant VISA announced an NFT purchase from the popular collection CryptoPunks. At the same time, EtherRocks, and NFT gaming are contributing to the activity surge in this sector. As a consequence, Outumuro said:
(…) NFT activity has significantly increased Ethereum fees and the amount of ETH being burnt along with them. This has led to several hours where more ETH was burnt than issued, effectively making it deflationary during brief periods of time.
Ethereum, From Digital Oil To “Ultra-Sound Money”
Ethereum has developed a multitude of use cases in different sectors, NFTs, DeFi, blockchain-based gaming, and more. In addition, its recently acquired deflationary nature could lead it to “develop a monetary premium like BTC”, the research claimed.
As NewBTC reported, Ethereum surpassed Bitcoin in other metrics, including daily value settle. The former network has settled up to $24 billion daily, compared to Bitcoin’s $8,5 billion.
This change and increase activity occurred despite Ethereum’s high transactions fees, 10 times higher than the number one cryptocurrency by market cap. Outumuro added:
CHARTThis is also the case for the number of transactions in each blockchain, with ETH being valued more closely to its transaction activity. 5x the number of daily transactions, yet still lagging in valuation.
Source: IntoTheBlockAdditional data also suggest that ETH is more adopted with over 20 million addresses holding it. The research highlighted those addresses could be own an undetermined number of users but can be used as a “proxy to observe growth in a crypto-asset community.
Source: IntoTheBlockThe aforementioned factors strengthen Ethereum’s fundamentals and progressively change how investors value the underlying asset, ETH.
In the coming months, as the network transitions towards ETH 2.0, more factors will contribute to the thesis that ETH has become the ultimate store of value. Outumuro said:
As NFTs and other applications continue to grow on Ethereum, this creates deflationary pressure and reinforces Ether’s monetary premium. Ultimately, this aligns users and holders towards $ETH becoming the store of value of the decentralized internet.
