More Ethereum was burned than minted in January, causing ETH’s total supply to decrease by 10,145.72 coins.

The total supply of Ethereum was reduced by 10,145.72 ETH in January thanks to its in-built burning mechanism introduced through EIP-1559 in August 2021 as part of the London Hard Fork.

According to the team at WuBlockchain, the net deflationary value of the ETH reduction in January is estimated to be worth $16 million. The total supply of ETH now stands at 120,515,673, and the digital asset currently has an annual growth rate of -0.012%.

In addition, the amount of Ethereum has reduced by 5,467.35 since Ethereum’s merge in September last year, as visualised in the following dashboard courtesy of Ultrasound.money.

Source: Ultrasound.money

Traders are Now Focused on Ethereum’s Shanghai Upgrade

To note is that in March, Ethereum is scheduled for its first major upgrade since the Merge. Dubbed the ‘Shanghai Hard Fork’, the upgrade is meant to introduce EIP-4895, allowing Ethereum validators of its Proof-of-stake network to withdraw the ETH they have staked to secure it.

Consequently, Ethereum traders are speculating on possible scenarios leading up to the Shanghai upgrade. If all goes well, there is the question of whether Ethereum validators will start the process of unstaking their ETH and dumping it in the market.

Luckily, withdrawals will be capped at approximately 43k ETH per day, reducing the chances of a mass exodus and dump in the markets.

Another scenario would be the same validators opting to keep their ETH staked to continue securing the network and benefit from the digital asset’s long-term potential value increment. Additionally, once withdrawals are operational, it might encourage other Ethereum investors to stake their ETH, thus reducing the available supply in the crypto markets.

$1,679 and $1,500 are the Ethereum Levels to Watch

Concerning price action, Ethereum is currently stuck between the $1,679 resistance level and the $1,500 support zone. The one-day ETH/USDT chart below shows that Ethereum remains in bullish territory above the 50-day (red), 100-day (yellow), 200-day (green) and 200-week (black) moving averages.

Source: Trading View

Furthermore, the digital asset seemed to have erased all losses due to FTX’s collapse in November. Also, a Golden cross between the 50-day and the 200-day moving average seems likely to occur in the second or third week of February.

Therefore, once the consolidation phase between $1,679 and $1,500 is complete, Ethereum could be headed to higher levels, provided the crypto market sentiment remains optimistic.

~By John P. Njui~