The circulating supply of Ethereum fell by 20% since 2021 due to increased staking and deflationary tokenomics.
Institutional investors such as BlackRock and VanEck promote Ethereum's adoption via efforts at tokenization of real-world assets.
Layer 2 solutions and Pectra upgrade enhance Ethereum's performance and usability and make it more attractive for both consumers and developers.
Ethereum is set for a possible move toward $6,000 on the back of diminishing supply, sound fundamentals, and building institutional demand. Sentiment remains subdued, but underlying fundamentals firm up.
Ethereum Supply Tightens as Staking and Deflation Persist
Since 2021, Ethereum supply on wallets has fallen from 90 million to 77 million, reflecting a 20% cut in market-available coins. This shrinking supply reduces sell pressure and supports long-term price stability. In addition, Ethereum has been deflationary since September 2022, with more ETH being burned than issued.
Staking activity continues to grow and remains sticky. The consistent increase in locked ETH reduces circulating supply and aligns with long-term holder behavior. With more users participating in staking and restaking mechanisms, Ethereum is becoming more economically secure. These combined forces continue to lower available liquidity, strengthening Ethereum’s position.
Technology and Ecosystem Upgrades Strengthen Ethereum’s Base
According to a post by Ted, Ethereum’s usability is steadily advancing. The upcoming Pectra upgrade aims to improve user experience while enabling broader network efficiency. Additionally, Layer 2 solutions are now live, delivering faster and cheaper transactions to users and developers.
Features like gasless transactions and smart wallets are rolling out across networks, reducing friction for new and existing users. Restaking protocols are unlocking new forms of yield, enhancing Ethereum’s role in providing economic security across the decentralized ecosystem. Together, these updates expand Ethereum’s real-world use cases while improving access.
Institutions and Tokenization Add Long-Term Demand
The settlement layer role of Ethereum is expanding. Institutions like BlackRock, VanEck, and Franklin Templeton are now embracing the ecosystem as they increasingly trust Ethereum’s infrastructure. Their entry is facilitating progress toward the tokenization of real-world assets like real estate, treasury, and credit.
The tweet also noted that Layer 2 activity is accelerating, while Ethereum’s role in DeFi remains firm. As supply on exchanges continues to drop and attention stays low, Ethereum’s fundamentals remain intact. Though broader market interest is subdued, Ethereum’s setup suggests that when momentum returns, it could be fast and decisive.
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