As the broader cryptocurrency ecosystem continues to grow amid bullish investor sentiment, Ethereum has caught the attention of Leon Waidmann, senior researcher at OnchainHQ.
According to Waidmann, Ethereum is about to start a rally as the bull market continues to gain momentum. Waidman believes ETH is back in deflationary territory and suggests that more Ether supply has been burned than the supply problem. The researcher expects the trend to continue as the cryptocurrency market soars.
Waidmann believes Ethereum is in bullish territory
Waidmann wrote that Ethereum’s bullish flywheel has been activated. He said that Ethereum’s increasing user count and rising gas fees could lead to more ETH burns, reducing the asset’s overall supply. Reduced supply creates scarcity that causes ETH prices to rise.
Leon Waidmann also believes that the price increase will attract more users, projects, and investors, fueling more on-chain activity on the smart contracting platform. Increased activity will lead to more fees generated and therefore more ETH burned.
Waidman calls the process a self-sustaining cycle. The cycle involves increased demand for ETH, burning of ETH, and price appreciation, which creates a positive feedback loop that further catalyzes the increase in the price of ETH. The cycle aligns with the broader bullish outlook in the cryptocurrency industry, making Waidmann believe that ETH is undervalued and that the asset's price could rise.
According to cryptocurrency data aggregator CoinMarketCap, ETH is trading at $3,149, having lost 4.32% in the last 24 hours. However, the asset is up 20% in the last seven days. As of press time, ETH has a market cap of $379 billion and a 24-hour trading volume of $48 billion.
Ethereum Foundation Offloads ETH to DAI
Data from Spot Onchain shows that the Ethereum foundation sold 100 ETH for 252,491 DAI on Oct. 23. On Nov. 12, the foundation sold another 100 ETH for 334,315 DAI, marking the first transaction after the foundation announced its 2024 report on Nov. 8.
The report shows that the foundation has $970.2 million in asset reserves with $788.7 million in crypto, of which 99.45% is in ETH as of Oct. 31. The foundation’s non-crypto assets and investments have accumulated $181.5 million.
The entire Ethereum ecosystem has $22.2 billion in treasury reserves overseen by organizations, foundations, and DAOs. The Foundation manages 4.4% of the total reserves. The ecosystem has deployed $457 million in funding between 2022 and 2023. The Foundation has contributed $240.3 million, which is more than half of the amount deployed.
The Ethereum Foundation intends to sell $ETH regularly to fund important public projects and maintain reserves. So far this year, the foundation has sold 4,066 ETHs worth $11.22 million for an average of $2,760. The count includes September and October sales that earned the foundation $3.07 million.
