Ethereum (ETH) Burn Rate is Decreasing, Supply Increasing

In the second quarter of 2024, the Ethereum network saw a total of 107,725 ETH burned, while 228,543 ETH were emitted, resulting in a net addition of 120

The second quarter of 2024 saw a total of 107,725 ETH burned, while 228,543 ETH were emitted. After accounting for the burned ETH, the net addition to the supply was 120,818 ETH, rendering the network inflationary for the period.

This burn rate of ETH dropped significantly, decreasing by 66.7% compared to the previous quarter. The primary factor contributing to this decline was reduced network activity, which led to lower gas fees.

There were only 7 days during Q2 when ETH burns exceeded emissions, marking a sharp decrease from the 66 days recorded in Q1. This substantial shift in network dynamics resulted in fewer days where the burn rate outpaced new ETH emissions.

Overall this is a bearish sign for the Ethereum market because network inflation, reduced coin burn rate, and other bearish factors are in play simultaneously.

Network Inflation

The net addition of 120,818 ETH to the supply indicates an inflationary trend, meaning more ETH is being created than burned. This increased supply can put downward pressure on prices.

Reduced Burn Rate

A 66.7% drop in the burn rate suggests decreased network activity and lower gas fees. Lower network activity can imply reduced demand for ETH, which is typically bearish.

Few Days of Higher Burns

With only 7 days in Q2 where ETH burns exceeded emissions, compared to 66 days in Q1, the reduced frequency of deflationary days further supports the bearish outlook.