Ethereum is primed to undergo a new rally in the next few weeks, according to OnChainHQ senior researcher Leon Waidmann. The analyst cites several factors including the asset’s present deflationary mechanism to support his theory of a surge.
As many digital assets continue to react with a surge to the present investor sentiment, Waidmann has his eyes fixed on Ethereum. Waidmann said Ethereum is open to a surge as long as the bull market gains ground. He noted that the token is now deflationary because the number burned is now more than the number issued for supply.
Waidmann makes staggering Ethereum prediction
According to Waidmann’s post, he noted that Ethereum’s bullish flywheel is now active. He also said there could be more burns due to increased users and gas feels, leading to a reduction in its overall supply. The reduced supply in turn creates scarcity, which pushes the price up, leading to a price surge.
He also believes that the network would enjoy patronage from both projects and individuals pushing up the on-chain activity numbers. The activities will lead to increased gas fees, which leads to more burns.
Waidmann sees the cycle as one that is self-sustaining. He noted that the cycle involves increasing the activities on Ethereum causing the demand for more ETH. With demand comes burning, which leads to price increases. The cycle is on par with the wider market, leading Waidmann to believe there is a surge in the future of Ethereum.
According to Coinmarketcap, Ethereum is at about $3,000, with the token losing 4.32% in the last 24 hours. However, it shows a bullish 20% over the last seven days. The token has a market cap of $379 billion while holding a trading volume of $48 billion.
Ethereum Foundation sells ETH to purchase DAI
Spot Onchain data has shown that the Ethereum Foundation sold off about 100 ETH to purchase 252,491 DAI on October 23. The foundation also made another ETH for DAI transaction days after it announced its 2024 report.
According to reports, the foundation has 99% of its reserves in ETH, a figure that represents $788 million out of its total $970 million. The foundation also holds investments and assets not related to crypto, which Is about $181 million.
The Ethereum ecosystem boasts a cumulative $22.2 billion worth of assets in its treasury reserve. The fund is managed by several foundations, DAOs, and organizations under its banner. The foundation is in charge of only 4.4% of the entire fund. Between 2022 and 2023, the foundation deployed $457 million in funding, contributing more than half the figure at $240 million.
The Ethereum Foundation will continue to sell ETH regularly to provide funds for new projects and maintain its reserves. This year, the foundation has sold ETH worth $11.2 million, selling at $2,760 per token. The figure includes September and October sales where it got $30 million.
The post Ethereum predicted to undergo surge following supply shrink first appeared on Coinfea.
