Recent market dynamics have once again put Ethereum’s supply under scrutiny, reigniting concerns about its inflationary trend. Earlier this year, Ethereum hit a significant milestone, surpassing 120 million ETH in its circulating supply, and the figure continues to grow.
Unlike other major cryptocurrencies such as Bitcoin and Cardano, which boast fixed supply caps, Ethereum was designed with an unlimited supply of tokens. This fundamental difference renders Ethereum an inherently inflationary asset, one with a perpetually increasing supply.
On-chain data from Ultrasound.money has highlighted the swelling supply of ETH in recent months amidst notable price fluctuations for the cryptocurrency. The latest data reveals that the total supply of Ethereum has now reached approximately 120.28 million ETH.
Over the past seven days alone, 16,039 new ETH tokens have been issued, corresponding to an annual inflation rate of 0.70%. Interestingly, this data shows that 243,886 ETH has been created in the past four months since the Dencan upgrade in March.
Ethereum’s inflationary mechanism is largely counteracted by burning tokens. This burn mechanism, introduced as part of Ethereum’s London Hard Fork, aims to reduce the overall supply of ETH by burning a portion of the transaction fees, thus introducing a deflationary counterbalance. However, data from Ultrasound.money shows that burns are currently lagging behind issuance, placing Ethereum on an inflationary trajectory. Specifically, 2,028 ETH were burned in the past seven days, compared to 18,075 ETH issued in the same period. Such a sustained increase in supply growth could exert downward pressure on the price of ETH if demand fails to keep pace.
At the time of writing, Ethereum is trading at $2,615, showing no significant gains or losses in a 24-hour timeframe. Over a broader seven-day period, Ethereum has largely traded within a range of $2,750 on the upper end and $2,530 on the lower end. The latest price action saw Ethereum rebounding at $2,540 in the past 12 hours. If this momentum continues, Ethereum could potentially climb and retest the $2,750 mark in the next few hours.
According to the latest figures from Greeks.live, approximately 184,000 ETH options are set to expire today. These options represent a substantial nominal value of $470 million and are characterized by a put-call ratio of 0.8 and a maximum pain point of $2,650. This high put-call ratio indicates that market participants are currently purchasing more put options than call options, suggesting a bearish sentiment.
