Ethereum (ETH) reached its all-time high price of $4,878** on November 10, 2021, alongside a historic market capitalization of **$548.4 billion. Two years prior, the Ethereum network underwent pivotal updates that reshaped the supply dynamics of its native token, Ether.
Despite these changes, ETH continues to face token inflation. As of August 18, circulating supply stands at approximately 120.21 million ETH, with each ETH valued near $4,570—just 6.3% below its peak price.
Key Updates Impacting Ethereum's Supply
1. The London Upgrade (August 2021)
Introduced a burn mechanism via EIP-1559, reforming transaction fees and gas refunds:
"EIP-1559 overhauled the fee market, adjusting gas refund handling and the ice-age schedule."
2. The Merge (September 2022)
Transitioned Ethereum from Proof-of-Work (PoW) to Proof-of-Stake (PoS), slashing emissions by reducing block subsidies by ~90%.
Post-Merge Inflation Metrics:
- Current annual inflation: 1.26%
- Pre-Merge projected inflation: 3.16%
Supply Dynamics and Gas Fees
- Net Supply Change: +3 million ETH (6.56 million issued, minus 3.55 million burned).
- Annual Burn Rate: ~1.75 million ETH (usage-dependent).
👉 How Visa’s Gas Fee Integration Could Reshape ETH Demand
Recent Development: Visa now allows gas fee payments via credit cards using ERC-4337 (Address Abstraction), potentially boosting fee burns and demand.
ETH Price Analysis (August 2023)
- Current Price: ~$1,680 (down 11% over 30 days).
- Market Sentiment: Mixed—some analysts predict further drops, while others foresee long-term appreciation.
Key Factors Influencing Future Price:
- Ecosystem growth (Layer 2 adoption, dApp innovation).
- Regulatory news.
- Macro crypto trends.
👉 Why Ethereum’s Deflationary Model Matters for Investors
FAQs
1. Could ETH surpass its $548.4B market cap record?
Yes—if demand surges due to institutional adoption, scalable solutions, or bullish market cycles.
2. How does EIP-1559 affect ETH’s value?
Burns reduce supply, creating upward pressure on price if demand remains steady.
3. What risks could hinder ETH’s growth?
Regulatory crackdowns, competitor blockchains, or prolonged bear markets.
4. Is Ethereum’s PoS model more sustainable?
Absolutely—PoS cuts energy use by ~99.95% versus PoW.
Final Note: While ETH’s path to reclaiming its ATH market cap is uncertain, its deflationary mechanisms and ecosystem innovations position it as a resilient asset.
Data sources: Ultrasonic.money, Finbold, Golden Finance