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Written by Author by Translated by: Vernacular Blockchain
1. Increased scarcity of Ethereum: Will supply tightening trigger a price rebound?
Ethereum’s supply on cryptocurrency trading platforms is becoming increasingly scarce, with its supply falling to its lowest level since November 2015.According to the latest data, only 8.97 million ETHs are left on the trading platform.This clearly shows that more and more investors choose to hold assets rather than trade easily.
Confidence in the long-term value of this particular cryptocurrency is rising as many holders transfer ETH to cold storage, DeFi protocols or staking rather than selling, thanks to changes in trading trends.However, this supply shortage comes at an interesting moment given the sharp decline in Ethereum prices in recent months.Some believe that market conditions and competitive pressures put pressure on ETH, while others believe that fewer coins on the trading platform may eventually push up prices.Now, everyone is paying close attention to the next moves of Ethereum.
2. Why is Ethereum supply shrinking?
One of the main reasons for Ethereum’s withdrawal from trading platforms is the rapid expansion of decentralized finance (DeFi).More and more investors are choosing to transfer ETH to the DeFi platform to leverage their assets by borrowing, staking or earning rewards.Instead of just leaving ETH in the trading platform wallet, many people choose to pursue opportunities for higher yields and passive income.
The emergence of pledge is a major game changer.Since Ethereum switched to the Proof-of-Stake mechanism, holders can now choose to lock their cryptocurrency in support of cybersecurity and exchange for rewards.Due to this significant shift, a large amount of ETH is no longer in circulation, which further reduces the amount of ETH available to investors on the trading platform.
3. Despite the decrease in supply, ETH prices remained
Often, the reduction in supply of any asset will drive up its price due to scarcity.However, Ethereum broke this expectation.ETH price has dropped nearly 45% from its December high and traded at about $1,899 on March 21.Despite the decline in supply, Ethereum has remained one of the weakest performing major cryptocurrencies in recent months.There are several factors that lead to price declines, including wider market uncertainty, shifts in investor sentiment, and growing competition from alternative blockchain networks.
4. Analysts Adjust Ethereum Price Forecast
As market conditions continue to change, financial analysts are also adjusting their expectations for the future of Ethereum.Standard Chartered, one of the world’s major banks, has cut its year-end ETH price target to $4,000, a sharp cut from its previous $10,000 forecast.This clearly shows growing concerns about the ever-changing landscape of Ethereum, including growing competition from Layer-2 solutions and rival blockchain networks.
Despite the adjustments in the forecast, investors remain strongly confident about Ethereum’s long-term potential.A big question now is whether new developments like staking-based ETFs or upcoming network upgrades can restore investor confidence and provide Ethereum with the impetus to return to previous bullish expectations.
5. Recovery is coming?
Although Ethereum has been struggling lately, some factors may help its rebound.A significant possibility is to launch a staking-based Ethereum ETF.If regulators approve ETFs that allow institutions to pledge ETH directly, it could attract a large wave of new investors.This will increase demand for Ethereum and may even push up its prices.At the moment, one of the most important things is to observe the amount of Ethereum available on the trading platform.With the reduction of ETHTokens available for trading, some believe this “supply tightening” may lead to price increases.
