Ethereum’s supply is shrinking, while Bitcoin is bringing more coins into the supply, up to the 21 million maximum. This means that Bitcoin’s value will decrease as more coins enter the market, but Ethereum’s value should increase as less of it is available. This dynamic is expected to be particularly significant during a bull run, as demand for cryptocurrencies increases.
Why Ethereum’s Shrinking Supply is a Bull Run Opportunity
Ethereum vs Bitcoin
Ethereum has been making headlines recently as its supply is decreasing, while Bitcoin’s supply continues to grow. Bitcoin has an emission rate, adding more coins into the supply, up to its capped limit of 21 million. As more Bitcoin enters the market, the value of each coin should decrease. However, Ethereum’s supply is shrinking, leading to potentially increased value for each coin.
The Shrinking Supply of Ethereum
Unlike Bitcoin, Ethereum has no capped limit on the number of coins that can be created. However, there is a built-in mechanism called the Ethereum Improvement Proposal (EIP) 1559 that is designed to reduce the supply of Ethereum circulating in the market.
EIP-1559 aims to improve the overall user experience when using the Ethereum network by reducing fees and making transactions faster. A part of this proposal includes “burning” a small fraction of each transaction fee, effectively removing some amount of Ethereum from circulation. This creates a deflationary mechanism that reduces the overall supply of Ethereum.
The Bull Run Opportunity
The decreasing supply of Ethereum is creating an opportunity for a potential bull run. When there are fewer Ethereum coins in the market, the value of each coin may increase.
With the increasing demand for decentralized finance (DeFi) and non-fungible tokens (NFTs), Ethereum’s shrinking supply could lead to a surge in demand, resulting in a potential price explosion.
This phenomenon is compounded by the increasing popularity of Ethereum-based blockchain games, art, and other decentralized applications, which have been expanding the reach of the Ethereum ecosystem.
Ethereum’s decreasing supply is a unique feature that sets it apart from other cryptocurrencies such as Bitcoin. The Ethereum Improvement Proposal has created an effective mechanism for reducing Ethereum’s supply while improving user experience. This reduction can lead to potential price increases for Ethereum, making it a great opportunity for investors to capitalize on the potential bull run.