Ethereum Supply Tightens as On-Chain Activity Soars to Yearly Highs

The Role of EIP-1559 in Supply Dynamics

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This heightened demand is occurring alongside a notable tightening of Ethereum’s circulating supply, a trend directly influenced by the network’s EIP-1559 mechanism. According to an analyst from Crypto Potato, this protocol continuously burns a portion of ETH, which keeps the net emission rate near zero even during periods of market flux. This deflationary pressure, coupled with increasing network usage, creates a powerful foundation for a more stable and robust market. The dual effect of rising demand and a limited, or even decreasing, supply is a crucial factor in Ethereum’s long-term value proposition.

A Signal of Quiet but Strong Growth

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The combination of surging on-chain activity and a tightening supply paints a picture of "quiet but strong growth," as described by analysts. Instead of a speculative bubble, the metrics suggest a healthy, organic expansion of the network. The sustained high levels of active and new addresses indicate that new users and applications are consistently joining the ecosystem. This fundamental strength, if key support zones for the price hold, could set the stage for a significant market rebound, with some analysts forecasting a potential return to the $4,000 price level.