Following the announcement by CBOE, enthusiasm surrounding Ethereum surged. However, an analyst’s remarks have cast a shadow over this optimism. The analyst pointed out that if the current rate of Ethereum’s supply increase persists after the initial excitement wanes, a price drop may be inevitable.
What the Charts Indicate?
Benjamin Cowen, cryptocurrency investor and founder of Into The Cryptoverse, made significant remarks on July 19. He suggested that if Ethereum’s supply continues to grow by approximately 60,000 ETH per month, it will revert to its level during the Merge by December. This scenario echoes the transition to the proof-of-stake consensus model in September 2022, which initially made Ethereum deflationary with a projected supply reduction to around 455,000 ETH by April 2024.
How Will Ethereum React?
Since April, Ethereum’s supply has risen by about 150,000 ETH. Cowen predicts that if this growth rate continues, the price movements seen over the past two years could repeat, potentially driving prices to previous lows. He stated that if the supply continues to increase at the current rate, it could reach pre-merge levels, with significant market impacts expected by September 2024.
Key Takeaways for Investors
- Monitor the monthly supply rate of Ethereum closely.
- Consider the potential for price declines in the next 3 to 6 months.
- Stay informed about market reactions to Ethereum’s supply changes.
The market consensus suggests Ethereum could be higher than its current price within the next 1.5 years, but another dip might occur in the interim. Recently, ETH saw a 2.33% increase, trading at $3,503. On-chain analyst Leon Waidmann also warned of a potential supply crisis, noting that only 10.2% of Ethereum is on exchanges while 39.3% remains locked in smart contracts.