Ethereum Issuance Drops Below Bitcoin’s For the First Time, Why This May Lead to a New Rally

Ethereum has been on a rally for the past week, moving from a two-month low at $1,700 to its current level at $3,223. Several factors have pushed the crypto market into a new rally, but most seem to gravitate around ETH and its ecosystem. After the implementation of EIP-1559, Ethereum’s native token became a deflationary asset due to the change in its fee mechanism. To validate transactions on the network a portion of ETH is “burn”, meaning send to an address that no one can access. As a consequence, ETH has been gaining traction as a store of value asset, for some experts, even more, efficient than Bitcoin. Researcher Lucas Outumuro has recorded a dropped in ETH’s daily issuance, lower than Bitcoin’s for the first time since its inception. As the chart below shows, ETH net inflation stands at 3574 ETH (1.11% annualized), and BTC net inflation stands at 900 BTC (1.75% annualized), Outumuro claimed. The decline in ETH’s daily issuance is attributed to the increase in on-chain activity. The research tracked this down to the surge in the non-fungible token (NFT) related activity. By 2021, NFTs have become a new mania in the crypto industry with a seemingly high level of adoption from the mainstream. A couple of days ago, payment giant VISA announced an NFT purchase from the popular collection CryptoPunks. At the same time, EtherRocks, and NFT gaming are contributing to the activity surge in this sector. As a consequence, Outumuro...