The market is yet to understand Ethereum’s four-prong supply sink
Unlike the Halving, $ETH's supply-side argument is not straightforward to grasp
But once understood, just like the Halving, these dynamics will drive a quick institutional repricing 👇
Unlike the Halving, $ETH's supply-side argument is not straightforward to grasp
But once understood, just like the Halving, these dynamics will drive a quick institutional repricing 👇
1) Firstly, ETHE has re-opened for subscriptions as of early February. This is a check valve: coin that enters does not leave.
With a CME contract paving the way for institutions to arb the ETHE premium, this ultimately creates a black hole for spot $ETH.
With a CME contract paving the way for institutions to arb the ETHE premium, this ultimately creates a black hole for spot $ETH.
2) While ETHE is an institutional supply sink, ETH 2.0 is a gravity well for diehard, ETH-denominated HODLERs.
Staking metrics are growing: According to @cryptoquant_com, the staking rate has grown by 250% since December and roughly 2.8m ETH ($4.3b) now sits in contract.
Staking metrics are growing: According to @cryptoquant_com, the staking rate has grown by 250% since December and roughly 2.8m ETH ($4.3b) now sits in contract.
3) This brings us to the third prong of thinning supply: DeFi adoption.
With DeFi re-emerging from its micro-winter, ETH TVL may now be bottoming. TVL is yet to climb through the Summer 2020 highs.
With DeFi re-emerging from its micro-winter, ETH TVL may now be bottoming. TVL is yet to climb through the Summer 2020 highs.
4) Finally, a new age of disinflation with EIP1559.
This is a proposal to burn a portion of ETH fees. Why is this important? With climbing fees, burning fees eventually leads to deflation. Fee burning could outpace inflation on ETH 1.0 and ETH 2.0 combined.
This is a proposal to burn a portion of ETH fees. Why is this important? With climbing fees, burning fees eventually leads to deflation. Fee burning could outpace inflation on ETH 1.0 and ETH 2.0 combined.
In summary:
#1) ETHE is an institutional supply sink
#2) ETH 2.0 is a HODLER supply sink
#3) DeFi is an Adopter supply sink
#4) EIP1559 is a structural, deflationary supply sink
#1) ETHE is an institutional supply sink
#2) ETH 2.0 is a HODLER supply sink
#3) DeFi is an Adopter supply sink
#4) EIP1559 is a structural, deflationary supply sink
With ETH-BTC above 0.038 and the dollar pair only just above the ATH, market momentum may ultimately bring these stories to the surface. Price first and the narrative of a supply-side crisis soon to follow.
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