Why ETH investors may have a difficult time despite these encouraging updates

Many predictions were made about what would happen to Ethereum [ETH] after the Merge. One of the most common concerns was that ETH was deflationary. However, there was some clarification on that front, since official sources stated that ETH achieved a practically zero total annualised issuance rate.

Ethereum developers launched the London update last year, which permitted Ethereum burning. When combined with the Ethereum burn, the reduced issuance rate added to its deflationary character and projected an optimistic image for Ethereum’s future.


Deflationary characteristics amplified 

As per Messari’s data, ETH’s supply also reduced considerably over the last few days. This further supported its deflationary characteristics.

#ETH reached a declining supply this week.

Is the “ultra-sound” narrative no longer a meme? 🦇 🔊 pic.twitter.com/Tez25ZjEi6

— Messari (@MessariCrypto) November 13, 2022

Interestingly, while the supply continued to decrease, Ethereum’s number of addresses holding 10+ coins just reached an ATH of 326,899. This development was positive, as it showed the confidence of investors in ETH.

📈 #Ethereum $ETH Number of Addresses Holding 10+ Coins just reached an ATH of 326,899

Previous ATH of 326,856 was observed on 12 November 2022

View metric:https://t.co/6ggy1nLJIb pic.twitter.com/7T3DSrg6fO

— glassnode alerts (@glassnodealerts) November 13, 2022

In theory, everything looked to be working in favor of ETH. However, these new updates did not seem to impact ETH’s price, as it was down by over 21% in the last week. At press time, ETH was trading at $1,259.72, with a market capitalization of over $153.5 billion.

Hold on! This can be concerning for ETH

The king of altcoins’ metrics suggested that things might get even worse for ETH. This was because there was a possibility of a further price decline in the days to come. According to CryptoQuant, the net deposits on exchanges were high compared to the seven-day average, which was a negative sign as it indicated higher selling pressure.

Ethereum’s number of active addresses went down. This suggested a lower number of users on the network. The total number of transactions also followed a similar route, which was yet another bearish signal. Santiment’s chart also supplemented the aforementioned metrics. Though ETH’s Market Value to Realized Value (MVRV) went up over the last week, it was still not adequate. ETH’s exchange outflow also registered a spike, which was a bearish sign too.

Source: Santiment

Regardless, not everything was against Ethereum, as a few metrics indicated towards a trend reversal. For instance, ETH’s exchange reserve was declining. This was a positive sign indicating lower selling pressure.

Moreover, ETH’s network growth registered a considerable uptick in the last few days, suggesting the possibility of better days in the near future.

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