In a historic turn of events, Ethereum (ETH) has seen its circulating supply fall below the proposed hard cap suggested by Ethereum’s co-founder, Vitalik Buterin, in Ethereum Improvement Proposal 960 (EIP-960). Although the Ethereum community rejected the proposal in 2018, the inadvertent crossing of this threshold is a noteworthy moment for the platform.
EIP-960 proposed setting a hard cap of 120,204,432 ETH on Ethereum’s supply, aligning it with the predictable monetary policy seen in Bitcoin. The aim was to introduce a sense of scarcity and potentially enhance the value of ETH. However, the Ethereum community opted for a flexible supply policy, adapting to the network’s changing needs.
The recent dip in Ethereum’s supply is attributed to the platform’s transition to a proof-of-stake (PoS) consensus mechanism and the implementation of Ethereum Improvement Proposal 1559 (EIP-1559). EIP-1559 introduced a mechanism for burning transaction fees, thereby reducing the overall supply of ETH.
Examining Ethereum’s recent market performance reveals several key observations:
Moving Averages: The price of Ethereum is currently above various moving averages, indicating a bullish trend. Notably, the 50-day moving average (MA) is above the 100-day and 200-day MAs, considered a positive sign in technical analysis.
Volume: There has been significant trading volume, suggesting strong market interest and supporting ongoing price movements.
Resistance and Support Levels: Ethereum’s price has encountered resistance at higher levels but found support at lower levels, signaling a potential consolidation phase.
Technical Indicators: The Relative Strength Index (RSI), a key technical indicator, appears to be in a moderate range, not indicating immediate pressure toward buying or selling extremes.
Ethereum’s recent achievements and milestones, coupled with its evolving supply dynamics, continue to shape its trajectory in the cryptocurrency landscape. Investors and enthusiasts are closely monitoring the platform’s developments as it undergoes significant upgrades and transitions.