Why is #Ethereum (ETH) price down today?
The EIP-1559 protocol burns a fraction of the gas fees per transaction, so lower network demand leads to a higher ETH supply growth. The latest data shows an ETH 4,853 burn in 7 days, significantly lower than the ETH 17,628 issued in the same period. Although the 12,774 ETH supply increase in the past 7 days represents a mere 0.57% annualized inflation, the issue with Ethereum network's lesser use becomes more concerning when considering its second layer scaling solutions.
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Blockchains ranked by 7-day DEX volumes, USD. Source: DappRadar
The decline in Ethereum's demand has impacted its ecosystem, including projects like Arbitrum, Base, Polygon and ZkSync Era. In contrast, Solana and Thorchain have shown increased activity. Similarly, Sui and Avalanche experienced a comparatively smaller decline in decentralized exchange (DEX) volumes compared to other platforms.
The exact reasons behind investors' decision to sell Ether are unclear. However, there seems to be reduced confidence in the U.S. approving an Ethereum spot instrument. Additionally, recent network health metrics for Ethereum have deteriorated. The uncertainty surrounding recent regulatory actions against the crypto industry, including Consensys, may also help explain the weakness in Ethereum's price.
