Ethereum (ETH) has reached a notable milestone that has gone largely unnoticed by many in the crypto community. The circulating supply of Ethereum has dipped below a critical threshold originally proposed in Ethereum Improvement Proposal 960 (EIP-960). This development is significant as it places Ethereum’s circulating supply below the suggested but rejected hard cap proposed by Ethereum’s co-founder, Vitalik Buterin.
Background on EIP-960:
EIP-960 was introduced by Vitalik Buterin in 2018, suggesting a hard cap of 120,204,432 ETH to ensure the economic sustainability of the platform. The proposal aimed to create a predictable monetary policy similar to Bitcoin’s, emphasizing scarcity as a potential driver of value. However, the Ethereum community opted to maintain a flexible supply policy that adjusts based on the network’s requirements.
The unintentional alignment of Ethereum’s circulating supply with the proposed cap is a nod to Buterin’s vision of scarcity. This outcome is a result of Ethereum’s transition to a proof-of-stake (PoS) consensus mechanism and the implementation of EIP-1559, which introduced a mechanism to burn transaction fees, reducing the overall supply of ETH.
Ether’s Price Dynamics:
Examining the price chart provides insights into Ethereum’s recent market performance:
Moving Averages: The chart indicates a bullish trend as the price of Ethereum is currently above several key moving averages. The 50-day moving average (MA) has crossed above the 100-day and 200-day MAs, a positive sign in technical analysis.
Volume: Significant trading volume has been observed, indicating strong market interest and supporting ongoing price movements.
Resistance and Support Levels: The price has encountered resistance at higher levels but has found support at lower levels, suggesting a potential consolidation phase.
Technical Indicators: The Relative Strength Index (RSI), a key technical indicator, appears to be in a moderate range, not signaling immediate overbought or oversold conditions.
The confluence of Ethereum’s circulating supply approaching the proposed hard cap, coupled with positive price trends, underscores the dynamic developments within the Ethereum ecosystem. It remains to be seen how this milestone will influence broader market dynamics and investor sentiment.