Ethereum [ETH] in Circulation at a 2-year Low, Bullish For Price?

By January 29, 2020Ethereum
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Ethereum

Ethereum [ETH] in Circulation at a 2-year Low, Bullish For Price?

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The amount of Ethereum (ETH) in circulation is at a 2-year low given the positive development in other areas of the trustless ecosystem.

The exponential rise of DeFi products, where data reveals that over $800 million of ETH has been locked up as collateral in exchange of network-issued stable coins, may have contributed to this.

ETH in Circulation at a 2-year Low

The drop in ETH in circulation was noted by Santiment, who posted their findings on Twitter:

“ETH’s token circulation hit a 2-year low a couple days ago on Jan. 26th. Although the long-term outlook for Ethereum still looks solid, it’s still important to be mindful of how many unique tokens are moving addresses on a daily basis to gauge network health.”

$ETH's token circulation hit a 2-year low a couple days ago on Jan. 26th. Although the long-term outlook for #Ethereum still looks solid, it's still important to be mindful of how many unique tokens are moving addresses on a daily basis to gauge network health. If you'd like a pic.twitter.com/zcl5zfEk5d

— Santiment (@santimentfeed) January 28, 2020

There are 109 million ETHs in circulation according to Etherscan.

Out of this, over 58 million ETHs changed hands in the past 24 hours generating 24-hour trading volumes of $10.3 billion according to coin trackers.

Rise of Unique Ethereum Addresses

Notably, the supply of ETH has been on a steady uptrend. Since launch in July 2015, the supply of ETH has risen 51% from 72 million to 109 million.

Ethereum ETH Supply Growth
Ethereum ETH Supply Growth

The number of unique ETH addresses continues to edge higher. From launch, the number of addresses rose from 9,205 to over 86 million.

Ethereum ETH Unique Addresses
Ethereum ETH Unique Addresses

In the last 24 hours alone, 86k new addresses were created.

Will This Affect ETH Prices

With the correlation, Ethereum’s difficulty has also edged higher and block rewards reduced through thirding, an event that was introduced in the Metropolis phase of the network’s roadmap.

Looks like the #Thirdening just happened on #Ethereum at block 7280000! Block reward is at 2 instead of 3. Congrats to all the hard working devs who made this happen! pic.twitter.com/liBQ1FGO8g

— sam cassatt (@samcassatt) February 28, 2019

Like every other token, the ETH price is affected by supply and demand dynamics. The rise of the former leads to a repricing that, as economics law dictates, leads to higher prices.

That, given the trajectory over the past few months as DeFi gained traction, has seen the price of ETH bottom up and is now soaring, clearing key resistance level in its wake.

ETH, at the time of writing, is now trading at $177. Analysts can assume the likelihood of higher prices because of reduced ETH in circulation.

1/ Ether is trustless economic bandwidth that can't be replaced by any other asset on the Ethereum network

It is uniquely trustless

Today protocols consume 3% of ETH's total economic bandwidth pic.twitter.com/Qcg67nQ07c

However, caution should prevail since the scarcity can be because of ETH locked up in DeFi apps, estimated to be at 3% of the total supply and expected to rise.

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