Ethereum (ETH) has seen an increase in burn rate this month, indicating that usage and activity on the network have increased significantly.
Data from Etherscan shows that on September 1, only 80 ETH tokens were removed from the circulating supply. This number has since increased to 1,119 daily ETH tokens burned, representing more than a 1,600% increase.
(Source: Etherscan)
However, this high burn rate has not been adequate to transform Ethereum’s status from inflationary to deflationary. Ultrasound Money shows that in the last 30 days, the number of ETH tokens added to the circulating supply has increased by more than 64,000.
Ethereum’s rising supply has been one of the main factors inhibiting its price growth. The largest altcoin has largely underperformed against Bitcoin this year as demand for Ethereum products also declines.
According to a recent report by Coinshares, Ethereum investment products saw $28M in outflows last week, which is quite an underperformance given that flows to Bitcoin products were positive at $284M.
Large Ethereum Holders Continue to Sell
As ZyCrypto earlier reported, whales have been selling Ethereum at an unprecedented rate, affecting its price action.
The Ethereum Foundation has been one of Ethereum’s biggest sellers. In September alone, the organization sold 1,150 ETH tokens valued at $2.8M, according to SpotOnChain.
Additionally, the Genesis Trading bankruptcy wallet and an Ethereum Initial Coin Offering (ICO) participant recently deposited more than $21M worth of Ethereum to exchanges.
Two major market players, including an Ethereum ICO participant and Genesis Trading's bankruptcy wallet, deposited 8,510 $ETH ($21.9M) to CEXs in the last 9 hours! #Ethereum ICO whale “0xb8c” sent 3,510 $ETH ($9.04M) to #Kraken again after 3 months. This whale still holds… https://t.co/83vDcHO6Qz pic.twitter.com/bRpdgKGVuH
— Spot On Chain (@spotonchain) September 23, 2024
However, despite these selling activities, ETH appears to be tracking Bitcoin’s price. After the recent gains, buyers entered the market, as seen in the Relative Strength Index (RSI), which has climbed from an oversold region to 60.
The Chaikin Money Flow also shows that sentiment is shifting from negative to positive as the indicator now points towards strong buying momentum.
(Source: TradingView)
This data suggests that buyers are gaining confidence in the rally. The positive sentiment could also be attributed to speculation around an altcoin season getting started. The total altcoin market capitalization has surpassed $1 trillion, creating speculation that an altcoin season could be getting started.
According to trader Ali_Charts, Bitcoin’s dominance hints at a possible drop to 47%, which could set the stage for the beginning of altseason.
Ether traded at $2,647 at press time after a 3.29% gain in 24 hours.
