Key Takeaways:
- The daily amount of ETH burned on Ethereum because transaction fees hit a record low on Saturday, signaling a dip in demand for the blockchain.
- New addresses, on-chain volume, and transaction counts have also declined in previous weeks, along with the on-chain activity.
- Network activity decline bears risk for Ether and altcoins.
The rate of ETH tokens burned as transaction fees hit a new low on Saturday, indicating a sharp fall in demand for the Ethereum block space.
Ethereum’s EIP-1559 change, which was aimed at simplifying the transaction process, also demands that the network burn all ETH used to pay the base transaction fee. The mechanism was thus designed to bring down inflationary pressure and potentially make Ethereum a deflationary asset during periods of high network activity.
Only a total of 53.07 ETH, valued at about $106,000 at current prices, were burned on Saturday, hitting a new all-time low. According to expert analysis, the supply of ETH is expected to grow 0.76% every year, if we take the burn rate values from the last 7 days.
The low burn rate has occurred at the same duration when there are declines in subsequent measures of activity, such as active addresses. The seven-day moving average of active addresses lately dropped to the lowest value since October 2024, according to online data. On a similar note, the creation of new addresses, transaction counts, and daily volumes have also fallen over the previous weeks.
The price target of Ethereum was recently lowered by Standard Chartered, going from $10,000 to $4000, as the network’s Layer 2s grow in number and size.
ETH Burning Rate
Ethereum’s merger from a proof-of-work mechanism to a proof-of-stake mechanism initiated a reduction in supply. We are now witnessing a historical milestone as the amount of burned ETH fell to an all-time low over the weekend. This signals price weakness and confirms a serious contraction in network demand. Based on data from Ultrasoundmoney, an annual supply increase of around 1% is expected.
Future of Ethereum (ETH)
The decline in network activity showcases a consistent loss for altcoins and is one of the causes of Ether’s prolonged weakness. As the price fights to sustain above the $4000 level, it is struggling to remain above the $2000 mark in the short term.
Geoffrey Kendrick, the global head of digital asset research at Standard Chartered, stated that Coinbase has accumulated massive gains through its Base on Ethereum network. As assets on the Ethereum network shift to better options like Base, the weakening of the main network has reached new levels. It is expected that the fee concessions for layer 2 solutions will be charged soon, along with mechanisms for generating more revenue in the main network.
At the time of writing, ETH token is valued at $2090.68 per token, up 4.00% in the 24-hour hours. The token has a 24-hour trading volume of $10.49 billion, with a total supply of 120.63 million ETH. ETH has been on a downward trend for the past three months, falling over 51% from its peak of $4,100 in December 2024. But despite this, large investors have been consistently accumulating Ether tokens. Analysts predict the uncertainty and market turbulence due to the trade tensions will keep the financial markets under pressure for another month. Despite this, investors largely remain optimistic about Ether token’s long-term prospects.
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