Market Update: Ether and Bitcoin Experience Declines
In the latest market developments, Ether (ETH) has seen a significant decline of over 5.1% in the past 24 hours, dropping below the $2,600 mark. Meanwhile, Bitcoin (BTC) has also experienced a downturn, with a decrease of approximately 2.9%, currently valued at $95,700. This downward trend in the largest altcoin has contributed to a nearly 4% drop in the CoinDesk 20 Index, coinciding with a broader market pullback influenced by news from U.S. President Donald Trump, who announced plans to unveil reciprocal tariffs next week. This development has exacerbated fears regarding a potential trade war with major trading partners.
Despite the overall market slump, Ether’s underperformance can be attributed to several specific factors. Notably, its circulating supply has recently surpassed the levels seen prior to the Ethereum Merge. The Ethereum Merge, which marked the network’s transition to a Proof-of-Stake (PoS) consensus mechanism through its integration with the Beacon Chain, had been anticipated to decrease Ether’s supply. Initially, this expectation held true for several months.
However, a reversal of this trend occurred in April, shortly following the activation of the much-awaited “Dencun” upgrade. This upgrade was designed to lower data fees associated with layer-2 networks and introduced transaction “blobs,” which effectively reduced overall transaction costs on the Ethereum network. The reduction in transaction fees has led to a decrease in the amount of Ether being burned. Since the implementation of EIP-1559 in 2021, each Ether transaction has included a base fee that is burned, contributing to a reduction in the total supply of ETH.
Recent data from Ultrasound.money indicates that the decrease in burned Ether has resulted in an increase in supply, with the circulating supply having grown by 8,242 ETH since the Merge. This uptick in supply has raised concerns among investors.
Additionally, the Securities and Exchange Commission (SEC) has recently postponed its decision regarding the listing of options contracts for BlackRock’s iShares Ethereum Trust (ETHA), further weighing on Ether’s market performance. Other contributing factors include regulatory restrictions imposed on the Ethereum Foundation and intensified competition from alternative networks such as Solana. Consequently, Ether’s value relative to Bitcoin has recently plummeted to levels not seen since 2021. Analysts at JPMorgan have noted that Ether currently lacks a compelling narrative akin to that of Bitcoin.
Despite this bearish trend, some analysts remain optimistic. They have observed that Ether’s price pattern resembles previous instances that were followed by renewed bullish momentum. On Friday, Jake Ostrovskis, an OTC trader at the crypto market maker Wintermute, reported to CoinDesk that he is witnessing “strong over-the-counter demand for ETH.” Furthermore, analysts from Santiment highlighted a decline in the number of ETH tokens being held at a profit since their inception. This bearish sentiment may set the stage for a potential rebound “once crypto markets are able to stabilize.”
