Ethereum (CRYPTO:ETH) is experiencing a notable increase in its value, driven by a deflationary mechanism and growing demand, according to senior researcher Leon Waidmann by OnchainHQ.
What happened
According to BitFinanzas, Waidmann forecasts a major rally for Ethereum backed by solid fundamentals, mainly its deflationary mechanism. In a crypto market with an optimistic trend, the expert highlights that the supply of ETH is in a deflationary state, where the number of tokens burned exceeds the amount issued, which could contribute to an upward trend of the asset.
Waidmann argues that Ethereum has entered a deflationary cycle driven by the growth of the user base and the increase in gas rateswhich increases ETH burn and reduces overall supply. This decrease in the availability of ETH creates upward pressure on its price. He describes this process as a “self-sustaining cycle” or “bullish flywheel,” in which growing demand, token burning, and price increases feed off each other, resulting in a greater appreciation of Ethereum.
According to Waidmann’s analysis, ETH price appreciation will attract even more users, projects and investors to the ecosystem, which will increase activity on the Ethereum network and consequently raise gas fees. This phenomenon will fuel the deflationary cycle, reinforcing the bullish potential. Today, ETH is trading at $3,149, marking a drop of 4.32% in the last 24 hours, but with a cumulative increase of 20% in the last week, according to data from CoinMarketCap.
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Why is it important
In parallel, Ethereum exchange-traded funds (ETFs) in the United States have seen a significant increase in investments, reaching a record of $295.5 million in daily flows on November 11. This growth evidences renewed interest in Ether, boosted by the recent momentum in the Cryptocurrency market and some political developments.
Among the main funds, the Fidelity Ethereum Fund (BATS:FETH) stood out with $115.5 million in flows, followed by iShares Ethereum Trust ETF (NASDAQ:ETHA) BlackRock (NYSE:BLK), which reported $101.1 million. Other products, such as Grayscale Ethereum Mini Trust ETF (ARCA:ETH) and the Bitwise Ethereum ETF (ARCA:ETHW), have also experienced significant investment flows.
Since their launch in July, Ethereum ETFs have accumulated nearly $3.1 billion in investments, despite losses reported by Grayscale’s fund. BlackRock’s ETHA ETF has surpassed $1.5 billion in flows, reflecting investor optimism over the prospect of a more favorable regulatory environment.
Analysts like CK Zheng from ZX Squared Capital and Rachael Lucas of BTCMarkets underline that expectations of a more permissive regulatory approach are driving investments in Ethereum. Furthermore, Ether has shown an increase of 8.4%, reaching a maximum of $3,384, according to data from CoinGeckowhich further reinforces the market’s positive perception of its performance and future potential.
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